Thursday, December 2, 2010
Updated every business day, circa 9 a.m. ET. To receive by email, click here. Links may require registration/subscription.
Receiving Wide Coverage ...
Fed Offers Look Behind Curtain on Bailout: The Federal Reserve released data showing the breadth of its emergency aid, and not just to Wall Street. In addition to the largest banks, beneficiaries included U.S. manufacturers and foreign companies, hedge funds, money market funds. The Journal's lead article said that, though the Fed has been credited with helping prevent many firms from collapsing, "critics also say the Fed overreached and the latest disclosures could open new fault lines." The paper's "Heard on the Street" column said the disclosure didn't seem to hurt shares of bailout beneficiaries, as bank shares leapt following the release of the data. An editorial said, "While it's interesting to see a fuller picture of how the Fed intervened in the panic, what the documents don't tell us is why." The Post said that while the Fed's actions may have prevented a financial meltdown, "the extent of the lending to major banks — and the generous terms of some of those deals — heighten the political peril for a central bank that is already under the gun for a wide range of actions."
Progress on Deficit Plan? Seven members of the White House's deficit commission endorsed its final plan Wednesday, in a move the Journal described as "setting up the prospect of action to address the nation's fiscal woes next year." While the plan is expected to fall short of the 14 votes it needs from the full panel, the paper said "the show of bipartisan support … gives the plan momentum many thought impossible just weeks ago." The Post said members of the commission "expressed a surprising willingness Wednesday to compromise on issues that have long divided Republicans and Democrats, including raising taxes and cutting Social Security."
Another Journal article said Fed Vice Chairman Janet Yellen called on Congress to put some kind of deficit reduction plan in place, amplifying recent comment from Chairman Ben Bernanke.
In the paper's "Capital," column, David Wessel said there are still big hurdles to keeping any such plan from being dead on arrival.
Some Respite for Europe: Turmoil in European markets eased amid speculation that the European central bank will expand bond buying. The Journal said that, behind the scenes, Spain and Italy are "leading an effort to spur more decisive action" from the ECB before the crisis spreads further. The Times said Italy has a good reason to press for more aid: speculation has been growing that it and Belgium, another country with a long history of debt and political problems, could become the next weak links in Europe's monetary unions. The Post said investors should be more concerned about how long Germany, the region's economic powerhouse, will be willing to prop up its weaker neighbors. Wall Street Journal, New York Times, Washington Post.
Another Journal article said the IMF expects to double its lending capacity to $450 billion over the next few months, giving it more firepower to deal with Europe's sovereign-debt crisis. "Whether that will be sufficient depends on how deeply the problem spreads," the paper said.
Wall Street Journal
U.S. securities regulators are in preliminary talks with Citigroup, Deutsche Bank, JP Morgan Chase, Morgan Stanley, UBS, and other major banks aimed at settling an investigation of their sales of CDOs. The paper called the move "a sign of interest by all sides in ending the probe without a rerun of the public fight between the SEC and Goldman Sachs.
A news analysis said "a flurry of recent bankruptcy filings suggests the corporate carnage set off by the financial crisis isn't done yet." The smallest and weakest companies are still unable to tap new financing in the debt markets, leaving them reliant on banks or other financial institutions to stay alive.
New York Times
DealBook looked at new research from Moody's suggesting that low-rated American companies have about $100 billion more in debt to refinance than analysts previously thought.
Executives of Fannie Mae and Freddie Mac executives told lawmakers they were not to blame for the foreclosure crisis, putting the blame on mortgage servicers, even as Acting Comptroller of the Currency John Walsh testified that they were partly responsible.
And, Lastly ...
New York Times Magazine: Roger Lowenstein's profile of Jamie Dimon in this coming Sunday's issue (already available online) declares the J.P. Morgan Chase CEO "America's Least-Hated Banker." Set aside some time -- it's an 8,000 word read. Judging from readers' comments, many people stopped reading after the headline.
with contributions from Marc Hochstein, Sean Sposito and Rachel Witkowski