Washington Extra – Two weeks

March 1, 2011

Perhaps the fifth time will be the charm. (Don’t hold your breath).

OBAMA-SPEECH/Looks like legislation to keep the government funded for another two weeks is heading for approval. “I think we’ll have a vote on that in the next 48 hours,” Senate Majority Leader Harry Reid said.

But then what?

This would be the fifth temporary measure passed by Congress to prevent a government shutdown this fiscal year. The last one is set to expire on Friday.

That’s a half year the government has functioned on continuing resolutions, with another half year to go. (Yes it adds up).

President Barack Obama called House Speaker John Boehner to talk about the negotiations and they spent 10-12 minutes on the phone, according to White House spokesman Jay Carney. Seems like a substantial amount of time to chat between busy men.

Financial regulators and lawmakers came to our Washington bureau for Day 2 of a Reuters finance summit. SEC Chairman Mary Schapiro, Acting Comptroller of the Currency John Walsh, Senator Jack Reed and Consumer Financial Protection Bureau adviser Elizabeth Warren. See coverage at http://www.reuters.com/summit/FutureFinance11

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

SEC seeks light for murky tech company trade

The top U.S. securities regulator is taking a hard look at private offerings of hot tech companies to ensure that investors in this murky corner of global capital markets are getting a fair shake. Mary Schapiro, chairman of the Securities and Exchange Commission, told Reuters that her agency has been reviewing decades-old U.S. rules on private placements. The issue has jumped into the spotlight as Wall Street banks offer their clients a chance to score stakes in hot Internet companies before they go public. The most high-profile example has been Goldman Sachs, which had planned to offer both U.S. and foreign investors a chance to own shares in Facebook through private placements.

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

Rapid trades, quasi IPOs roil market cop

Lightning-fast, high-volume trading and the wild market swings it can bring, as well as strong demand for private stock offerings, have U.S. financial regulators scrambling to keep up, officials said. Even as they implement bank reforms that followed the 2007-2009 financial crisis, authorities are trying to come to grips with powerful computer-driven trading innovations, they told Reuters. As major exchanges combine seeking to capture more of the mushrooming trading business, U.S. Senate securities subcommittee Chairman Jack Reed urged more attention to market structure, transparency and volatility.

For more of this story by Kevin Drawbaugh and Rachelle Younglai, read here.

U.S. foreclosure deal must heal housing woes: Warren

U.S. consumer financial protection chief Elizabeth Warren said that a massive settlement of mortgage foreclosure abuses should focus on healing a deeply troubled U.S. housing market, not punishing lenders. “I don’t think this is about a pound of flesh. I think that’s the wrong way to think about it,” Warren told Reuters.

For more of this story, read here.

For more from the Future Face of Finance Summit, click here.

More of our top stories from Washington…

Obama aides craft new strategy amid Mideast unrest

The Obama administration, seeking to counter criticism it has struggled to keep pace with turmoil sweeping the Arab world, is crafting a new strategy for the region and will roll it out in coming weeks. Inside the White House, a small group of pro-democracy advisers is gaining greater influence over Obama’s thinking as the policy takes shape. But Obama’s push for reform will be tempered by a desire to preserve longtime partnerships with Arab governments considered crucial to U.S. interests on everything from fighting al Qaeda to containing Iran to securing vital oil supplies.

For more of this analysis by Caren Bohan and Matt Spetalnick, read here.

US ships move toward Libya amid fears of chaos

Warships sailed toward Libya as Washington warned that the oil-producing North African country could descend into chaos unless embattled leader Muammar Gaddafi relinquished power. The repositioning of ships and aircraft is widely seen as a symbolic show of force since neither the United States nor its NATO allies have shown any appetite for direct military intervention in the turmoil that has seen Gaddafi lose control of large swaths of his country. The White House said the ships were being redeployed in preparation for possible humanitarian efforts.

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

U.S. in no rush to arm Libyan opposition

The United States has no plans at the moment to ship weapons to rebels seeking to oust Libyan leader Muammar Gaddafi as it seeks to identify leaders of fragmented opposition forces. “We believe it’s premature to make any decisions of that kind,” a national security spokesman for President Obama said. Another official said while Libyan rebels have shown an ability to organize effectively to confront Gaddafi, they are “not coalescing” yet into a coherent national movement. Even if the U.S. government wanted to, there would be “no easy process for funneling assistance” to anti-Gaddafi elements, the official added.

For more of this story by Mark Hosenball, read here.

House passes stopgap bill to avert shutdown

The House of Representatives voted 335-91 to extend government funding for two more weeks, a move that would avert a federal shutdown but do nothing to resolve a bitter debate over the federal budget. With government funding due to expire on Friday, the Senate was expected to quickly take up the measure, which would give lawmakers more time to agree on funding levels for the fiscal year that ends on September 30.

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

Bernanke says costly oil no threat to U.S. economy

Federal Reserve Chairman Ben Bernanke offered a fairly upbeat assessment of the economy, saying the recent surge in oil prices is unlikely to have a major effect on growth or inflation as long as higher prices do not become sustained. He told the Senate Banking Committee he saw increasing evidence that the economic recovery has enough momentum to become self-supporting. But job growth remains far too anemic, he said, indicating the Fed was unlikely to cut short its $600 billion bond-buying stimulus.

For more of this story by Pedro Nicolaci da Costa and Mark Felsenthal, read here.

For highlights of Bernanke’s testimonyl, click here.

Republican Gingrich to take step towards presidential bid

Former House Speaker Newt Gingrich is expected to take a step as early as this week toward a run for the Republican presidential nomination in 2012, a senior Republican official said. The official said Gingrich is expected to announce the formation of a presidential “exploratory” committee, a key first step toward a White House bid. He would become the first prominent Republican to take such a step in what has been a slow start in the race to decide who will oppose President Obama’s re-election bid in 2012.

For more of this story by Steve Holland, read here.

Republicans must nail down housing option-Geithner

Republicans must come to grips with how to overhaul housing finance if they are serious about ending the government’s leading role in the wrecked system, Treasury Secretary Timothy Geithner said. In what amounted to an opening round of talks on how to wind down Fannie Mae and Freddie Mac and get the private sector more involved in the $10.6-trillion market that cratered in 2008, Geithner warned the housing sector was “still in a very difficult state.”

For more of this story by Corbett B. Daly and David Lawder, read here.

U.S. says will talk with, aid North Korea on right terms

The United States is ready to talk to North Korea and resume humanitarian aid to the isolated state under the right conditions. Stephen Bosworth, the State Department’s special envoy for North Korea, said Washington was working to end a two-year stalemate in six-nation talks on ending the North’s nuclear weapons programs. “We do not regard regime change as the outcome of our policy, but we do regard a change in regime behavior as necessary to any fundamental improvement in the overall relationship,” he told the Senate Foreign Relations Committee.

For more of this story by Paul Eckert, read here.

American women gain in school, lag at work

Women have made big economic and educational gains in recent years, but they still trail men in terms of pay and participation in the workforce, according to a White House report. More women than men have a high school education, more have university degrees, and more have graduate degrees, but at all levels of education, women earn about 75 percent as much as their male counterparts.

For more of this story by Patricia Zengerle, read here.

US advisers give mixed menthol view, Lorillard up

Some advisory panel members say there is a lack of evidence to show menthol cigarettes expose smokers to higher risk of disease, sending shares of tobacco company Lorillard up more than 3 percent. “The evidence is insufficient to conclude that smokers of menthol cigarettes face a different risk of tobacco-caused diseases than smokers of non-menthol cigarettes,” advisers to the FDA said in part of a proposed report due to the agency later this month. However, other members of the FDA’s tobacco advisory panel said menthol might make cigarettes more addictive.

For more of this story by Susan Heavey, read here.

Top court rejects AT&T corporate privacy rights

AT&T and other corporations do not have personal privacy rights to prevent disclosure of federal government records about them, the Supreme Court ruled. The justices unanimously overturned a ruling by an appeals court for the telecommunications company that corporations can assert personal privacy in claiming the records should be exempt from disclosure.

For more of this story by James Vicini, read here.

What we are blogging…

So how plugged in is the SEC chair? (technologically speaking)

SEC Chairman Mary Schapiro says her agency has its work cut out to compete with the massive amounts of money that private firms, policed by the SEC, pour into the latest technology. So what does she personally use on the technology front? “I have an iPad.”

For Tabassum Zakaria’s full post, click here.

From elsewhere…

Spring Break party in Mexico? Texas officials advise no

As college students prepare for the annual ritual of drunken Spring Break partying, Texas officials are urging them to stay away from Mexico. “Drug violence has not discriminated — innocent bystanders and people who may have been in the wrong place at the wrong time are among the casualties,” Texas Department of Public Safety Director Steven McCraw said. “Our safety message is simple: avoid traveling to Mexico during Spring Break and stay alive.”

For more of this story, read here.

Photo credit: Reuters/pool (Obama talks with Reid after State of the Union address)

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