NATIONAL HARBOR, Maryland (Reuters) – The largest U.S. banks are “practitioners of crony capitalism,” need to be broken up to ensure they are no longer considered too big to fail, and continue to threaten financial stability, a top Federal Reserve official said on Saturday.
Richard Fisher, president of the Dallas Fed, has been a critic of Wall Street’s disproportionate influence since the financial crisis. But he was now taking his message to an unusual audience for a central banker: a high-profile Republican political action committee.
WASHINGTON (Reuters) – Federal Reserve officials will spend much of a meeting next week debating the potential risks from the central bank’s stimulus plan, but Chairman Ben Bernanke has already signaled he believes the costs of inaction are even greater.
The U.S. central bank looks set to keep buying $85 billion a month in mortgage and Treasury bonds in an effort to encourage investment and bolster a weak economic recovery.
BUENOS AIRES, March 13 (Reuters) – Jubilant Argentines
poured into churches on Wednesday to celebrate the surprise
announcement that one of their own – Cardinal Jorge Mario
Bergoglio – was the first Latin American pope, and many hoped
he’d bring change to a Church in crisis.
People throughout the mainly Roman Catholic country rushed
to churches, some crying and praying that the 76-year-old Jesuit
can bolster faith in the Vatican after a series of scandals.
Just how big is the benefit that too-big-to-fail banks receive from their implicit taxpayer backing? Federal Reserve Chairman Ben Bernanke debated just that question with Massachusetts senator Elizabeth Warren during a recent hearing of the Senate Banking Committee. Warren cited a Bloomberg study based on estimates from the International Monetary Fund that found the subsidy, in the form of lower borrowing costs, amounts to some $83 billion a year.
Bernanke, who has argued Dodd-Frank financial reforms have made it easier for regulators to shut down troubled institutions, questioned the study’s validity.
Watching Ben Bernanke testify before Congress in recent years, it’s hard to shake the feeling that this is a Fed Chairman who has been largely abandoned by his own party. Hearing after hearing, Bernanke receives steady support and praise Democrats for his efforts to stimulate a fragile economic recovery – and takes constant heat from Republicans for what they perceive as the possible dangers of low interest rates.
Many people forget Bernanke was first nominated to his current role by a conservative Republican president, George W. Bush. Bush, though he was reappointed to a second term by President Barack Obama. Bush first named Bernanke to the Fed’s board in 2002, then brought him to the White House to lead his Council of Economic Advisors.
The U.S. workforce has been shrinking rapidly in recent years, but a new report from UniCredit highlights just how massive the effect of this trend really is. Economist Harm Bandholz says it amounts to a gaping 3.6 percentage points of U.S. unemployment.
That means the U.S. jobless rate, which dropped to 7.7 percent in February, would actually be around 11.3 percent without the decline in labor force participation. This would put American unemployment a lot closer to the euro zone’s recently reported record high rate of 11.9 percent.
Massachusetts’ rookie Senator Elizabeth Warren was out making waves again at a Senate Banking Committee hearing on Capitol Hill today. The former Harvard law professor contrasted the legal code affecting drug prosecutions with what she depicted as cushy settlements for large Wall Street firms that committed egregious crimes.
Take Standard Chartered. They were fined $667 million by U.S. regulators for breaching sanctions related to Iran and three other countries. Yet the bank posted a tenth straight year of record profits.
After two days of testimony from Federal Reserve Chairman last week in which he decisively criticized Congress’ decision to slash spending arbitrarily in the middle of a fragile economic recovery, a report on money market funds from the New York Fed nails home the point.
The paper’s key finding is that, as most observers already knew, investors were a lot more worried about a break-up of the euro zone in the summer of 2011 than they were about U.S. congressional bickering over the debt ceiling.
WASHINGTON, March 5 (Reuters) – The Federal Reserve’s
aggressive monetary stimulus will make it harder for the U.S.
central bank to engineer a smooth retreat from its
unconventional policies, a top Fed official said on Tuesday.
“I fear that small mistakes (could have) large
consequences,” said Jeffrey Lacker, President of the Federal
Reserve Bank of Richmond and an inflation hawk who has been
skeptical of central bank bond buying.
That’s not a typo in the headline. In a recent speech that took some mental gymnastics to absorb, Federal Reserve Chairman Bernanke countered critics of his low rates policy by arguing that a loose monetary policy is the best way to ensure rates can rise to more normal levels.
Why? Because interest rates will naturally move higher once stronger economic growth leads to higher rates of return on investment, Bernanke said. Here’s his argument: