Tales from the Trail

Washington Extra – Summit day

February 28, 2011

Our Washington bureau interviewed regulators and lawmakers at a Reuters finance summit today.

FINANCE-SUMMIT/WOLINDeputy Treasury Secretary Neal Wolin told us he did not see any national security concerns with Deutsche Boerse’s planned takeover of NYSE Euronext.

FDIC Chairman Sheila Bair said America’s big international banks should restructure their operations unless they can prove that they can easily be broken up if they start toppling during a financial crisis.

Republican Representative Scott Garrett, who chairs the House panel overseeing mortgage finance giants Fannie Mae and Freddie Mac, said the House of Representatives will likely approve legislation revamping the way Americans finance their homes by year’s end.

House Financial Services Committee Vice Chairman Jeb Hensarling plans to introduce in weeks or months legislation that would wind down mortgage giants Fannie Mae and Freddie Mac within five years.

For a look at stories, video and blogs from the summit go to: http://www.reuters.com/summit/FutureFinance11

Here are our top stories from the Future Face of Finance Summit…

Exchange mergers only just beginning

The mergers of exchanges have only just begun as growing competition and even new regulation drive them closer together, irrespective of national borders. Top executives said the world’s trading platforms and clearinghouses will continue to band together as the wave of consolidation that swelled this month will grow stronger. The comments suggest the emerging group of trading powerhouses will grow even larger — and that they will eventually overcome any hurdles to cross-border consolidation of capital markets.

For more of this story by Luke Jeffs and Rachelle Younglai, read here.

Foreclosure fines may go to loan modifications

Financial penalties extracted from large banks over their mortgage servicing practices may be used for loan modifications, a top Obama administration official said. Deputy Treasury Secretary Neal Wolin said he did not have a set timeline for when regulators and a coalition of state attorneys general will forge a settlement with banks, which have been accused of foreclosing on borrowers without having the necessary paperwork in place.

For more of this story by Corbett B. Daly and Sarah N. Lynch, read here.

D.Boerse-NYSE not seen US security risk

A senior Treasury official said he did not see any national security concerns with Deutsche Boerse’s planned takeover of NYSE Euronext. “I don’t have any national security concerns on this at the moment,” Deputy Treasury Secretary Neal Wolin said.

For more of this story by Rachelle Younglai and Sarah N. Lynch, read here.

Bair sees bank structural changes

Large financial institutions may need to make significant and potentially costly structural changes to comply with new “living will” requirements, bank regulator Sheila Bair said. The chairwoman of the FDIC said financial firms will likely submit their living wills to her agency by the end of the year. She said some large banks will probably have to make structural changes so that regulators can break them up if they are failing and seized by the government.

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

More of our top stories from Washington…

US moves warships closer to Libya, freezes assets

The United States began moving warships and aircraft closer to Libya and froze $30 billion in Libyan assets, ramping up pressure on leader Muammar Gaddafi after calling on him to step down. The ships could be used for humanitarian and rescue missions, Secretary of State Hillary Clinton said. “There is not any pending military action involving U.S. naval vessels.”

For more of this story by Missy Ryan and Ross Colvin, read here.

US shutdown unlikely, but budget battle continues

A short-term deal taking shape in Congress to avert a government shutdown is only a temporary respite from a bitter debate over the federal budget as Democrats and Republicans clash over spending cuts. With government funding due to expire on Friday, lawmakers were expected this week to vote on a measure that would push the deadline back by several weeks. But that plan gives little clarity for financial markets, military contractors, local governments and millions of ordinary citizens who are wondering how they will be impacted by a budget fight that is likely to dominate Washington this year.

For more of this story by Andy Sullivan, read here.

For scenarios by Richard Cowan,, click here.

Budget talks should solve funding for year- White House

Congressional negotiations to avoid a government shutdown are heading in the right direction but must focus on securing funding through the rest of the fiscal year, the White House said. “We’re pleased that there seems to be some progress and we think we’re moving in the right direction. But this is still a process that is being worked up on (Capitol) Hill,” White House press secretary Jay Carney told reporters.

For more of this story, read here.

Obama offers states flexibility on healthcare law

President Obama extended an olive branch to states struggling to implement his healthcare law, offering support for a proposal that would give them some flexibility in carrying out its key parts. He highlighted a provision that would allow states to tailor their own solutions in 2017 if they fulfilled the same goals as his reform push and said he supported a measure put forward in Congress to move that date up to 2014. “If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act does — without increasing the deficit — you can implement that plan,” Obama told the governors.

For more of this story by Jeff Mason and Lisa Lambert, read here.

Consumer spending makes slow start, factories roar

Consumer spending barely edged up in January as households took advantage of tax cuts to rebuild their savings, suggesting spending would offer only a modest lift to the recovery in the first quarter. Other data painted a bullish picture of the manufacturing sector, with a gauge of factory activity in the Midwest hitting a 22-1/2 year high this month, which should help the economy weather rising oil prices and maintain its steady growth momentum.

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

Ex-Colonial Bank exec to plead to criminal charges

A former executive at Colonial Bank, which collapsed in part because of its close ties to the now-bankrupt Taylor, Bean & Whitaker Mortgage Corp, is expected to plead to criminal charges on Wednesday. Catherine Kissick is expected to plead to charges before the same judge handling the criminal fraud case against the former chairman of Taylor, Bean & Whitaker, Lee Farkas, according to court records.

For more of this story, read here.

U.S. irked by China’s shrimp duty challenge at WTO

U.S. trade officials reacted icily to China’s decision to challenge shrimp duties at the WTO, which they said would complicate efforts to resolve a trade spat involving a number of other U.S. trading partners. “The United States is deeply disappointed in China’s decision to request consultations,” Nefeterius McPherson, a spokeswoman for the U.S. Trade Representative’s office, said in a statement.

For more of this story, read here.

What we are blogging…

Hensarling proud of fiscal conservative creds, embraces Tea Party allies

It is clear that House Financial Services Committee Vice Chairman Jeb Hensarling is proud of his credentials as a fiscal conservative. He may have more competition for that label after the November election swept in members of the Tea Party. But he sees that as a good thing. We asked him how his Tea Party colleagues are fitting in on Capitol Hill.

For Tabassum Zakaria’s full post, click here.

Obama tweaks Republicans at governors lunch

President Obama leaped into political frays on a whole bunch of different levels when he addressed state governors at a White House luncheon. Of singular interest was his mention of Republican Mitt Romney, a potential 2012 presidential candidate who is spending time these days defending the healthcare overhaul he executed as governor of Massachusetts.

For Steve Holland’s full post, click here.

From elsewhere…

German celebrity opossum misses one Oscar pick

Heidi, Germany‘s cross-eyed celebrity opossum, came up one pick short of perfectly predicting top awards at the Oscars, incorrectly tipping “127 Hours” to win best picture, which instead went to “The King’s Speech.” The opossum correctly picked Natalie Portman as best actress and Colin Firth as best actor in a series of appearances on the “Jimmy Kimmel Live!” show. Heidi, who lives at the Leipzig Zoo, attempted to duplicate the success of Germany’s Octopus Paul, who correctly tipped each of Germany’s matches in last year’s soccer World Cup, as well as the final between Spain and Netherlands.

For more of this story, read here.

Photo credit: Reuters/Joshua Roberts (Deputy Treasury Secretary Neal Wolin at Reuters finance summit)

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