Tales from the Trail

Washington Extra -Soothing business, suing business

October 4, 2010

President Barack Obama had some soothing words for business leaders at the White House today, telling them that, despite some impressions to the contrary, he was really on their side after all. Financial regulatory reform was necessary, but “it is important now that there is a period of healing and consolidation and implementation that is less disruptive.”

Presumably the head of American Express was not invited to the meeting, on the day that the Justice Department decided to sue the company, saying its rules preventing merchants from encouraging consumers to use cheaper, rival cards violate antitrust law.amex It is the latest salvo in the administration’s battle with credit card companies, who it accuses of scalping consumers. Amex typically charges higher fees to merchants than rival cards, with the justification that its clients are richer and spend more.

Advocates of the government’s action say credit cards cost significantly more in the United States than abroad, and tough measures are required to open up the market and protect consumers. But the American Bankers Association expressed some valid doubts that merchants would actually pass on any savings from the Justice Department’s action to those consumers.

At the Chamber of Commerce, wounds are also still raw. It is waging its own legal battle with the Securities and Exchange Commission over a rule to give shareholders more power to influence corporate boards, a rule it called arbitrary and capricious. A small victory for the Chamber today, after the SEC announced it would delay implementation of the rule pending the outcome of the legal challenge.

Here are our top stories from Washington today…

U.S. sues Amex; Visa and MasterCard settle

The U.S. Justice Department sued American Express Co, saying its rules preventing merchants from encouraging consumers to use cheaper, rival credit cards violate antitrust law. Simultaneously, the Justice Department settled with Visa Inc and MasterCard Inc, which agreed to allow merchants to offer discounts to consumers who use less expensive types of credit or debit cards.

For more of this story by Diane Bartz and Maria Aspan, read here

U.S. housing shows stability, factory orders fall

Pending sales of previously owned U.S. homes hit a four-month high in August, a sign the  housing market was stabilizing at very low levels after falling sharply after a home-buyer tax credit expired. “We don’t think things are going to get any worse, but they are not going to get better very quickly,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

For more of this story by Lucia Mutikani, read here.

For a graphic on pending home sales, click here.

Obama says looking for ways to cut corporate taxes

President Barack Obama said he was very interested in finding ways to lower U.S. corporate taxes without costing the government money. At a top marginal rate of 35 percent, corporate income taxes in the United States are among the highest in the world, and big business often complains that it hampers their competitiveness. Many groups, including Democrats, support lowering the rates, but the sticking point has always been how to pay for it.

For more of this story, read here.

Obama says US fiscal situation “untenable”

President Barack Obama said the United States was facing an “untenable fiscal situation” and would have to get serious about tackling its federal deficit.

For more of this story, read here.

U.S. housing shows stability, factory orders fall

Pending sales of previously owned U.S. homes hit a four-month high in August, a sign the  housing market was stabilizing at very low levels after falling sharply after a home-buyer tax credit expired. “We don’t think things are going to get any worse, but they are not going to get better very quickly,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

For more of this story by Lucia Mutikani, read here.

For a graphic on pending home sales, click here.

Gensler: flash crash panel should review brokers

The head of the U.S. Commodity Futures Trading Commission urged a regulatory panel to make recommendations, including on price and volume limits for brokered trades, in the wake of the May 6 “flash crash” that has cast doubt on the efficiency of the market. Gary Gensler outlined possible remedies, including expanding the visibility of the order book, or the bid/ask offers that are made public; and reviewing when and under what conditions market halts are put in place.

For more of this story by Christopher Doering, read here.

Senator Kaufman selected as new top TARP cop

Senator Ted Kaufman was selected to chair the congressional panel overseeing the $700 billion financial sector bailout program — a day after the program officially expired.

For more of this story by Dave Clarke, read here.

What we are blogging…

White House adviser says Obama to energize his base for November

President Barack Obama adds a new item to his first-term to-do list: energize his most loyal supporters in a national get-out-the-vote campaign for the November congressional midterm elections.

For David Morgan’s full blog, click here.

From elsewhere…

Census shows exotic sea life; helps study BP spill

Scientists completed a 10-year census of marine life after finding thousands of exotic new species in a project that will help assess threats to the oceans ranging from climate change to BP’s oil spill. The $650 million international census, by 2,700 experts in 80 nations, discovered creatures such as a hairy-clawed “yeti crab,” luminous fish in the sunless depths, a shrimp thought extinct in Jurassic times and a 7-meter (23 ft) long squid. But the project also documented overfishing of cod or tuna, hazards from oil and other pollution and impacts of global warming.

For the full story by Alister Doyle, click here.

For more stories from our Washington correspondents visit www.reuters.com and stay informed.

Photo Credits:  REUTERS/Jason Reed (Obama hosts the President’s Economic Recovery Advisory Board meeting at the White House); REUTERS/Brendan McDermid (American Express  sign on a restaurant door in New York)

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