March Jobs Report Released

On Friday, the U.S. Department of Labor said in its March jobs report that non-farm payrolls rose by 162,000, the largest gain since March 2007. Despite the gains, economists were expecting payrolls to rise by as much as 200,000. The Census accounted for 48,000 of the employment boost. Another 40,000 of the increase came in other temporary jobs. The unemployment rate stayed at 9.7%, in line with economists’ expectations. The U.S. economy has lost nearly 8.5 million jobs since the recession began. With stock markets closed for Good Friday, the report’s full impact will be more apparent next week. Total government employment, which includes state and local jobs, rose by 39,000. Beyond government jobs, the report showed that manufacturing jobs continued to trend up, rising by 17,000, as well as jobs in the construction industry which added 15,000 jobs in March.

Senate Financial Regulatory Reform Bill 

The week began with White House Press Secretary Robert Gibbs saying that the President’s recent victory on healthcare legislation will give him momentum heading into the next legislative battle over financial regulatory reform. Gibbs and some Democratic leaders predict that a bill could be passed and signed by the President as early as Memorial Day. On Tuesday, Senator Bob Corker (R-TN) said he “absolutely cannot support a bill written by Senate Democrats in its current form.” Corker’s statement was a reversal of sorts from his comments the previous week in which he predicted a bill would pass with bipartisan support.

On Friday, sources indicated Agriculture Committee Chairman Blanche Lincoln (D-AR) and Ranking Member Saxby Chambliss (R-GA) plan to announce a bipartisan bill and pass it through their Committee soon after Congress returns from its two-week April recess. Lincoln expects her committee’s legislation to be incorporated into the larger bill passed by the Senate Banking Committee before being brought to the Senate floor. Sources also indicated the Lincoln-Chambliss legislation would be more favorable to industry than the language currently in Dodd’s bill. Dodd’s bill, which currently includes tough derivatives language crafted in part by Treasury officials, would force most financial companies to trade derivatives on public exchanges and submit deals to central clearinghouses. Companies also would have to raise enough capital to prove they could cover unexpected losses. In a recent speech, Lincoln said she supports transparency in the derivatives market and requiring clearinghouses to approve and back most deals to guard against systemic risk.

Treasury Announces Sale of Stake in Citigroup

On Monday, the Department of Treasury announced that it expects to sell its 27% stake in Citigroup before the end of the year and that it had hired Morgan Stanley to handle the sale of approximately 7.7 billion Citigroup shares. Morgan Stanley has previously served as an adviser to the Treasury Department on asset disposals by American International Group and government assistance to Fannie Mae and Freddie Mac.

SEC May Require Greater Disclosure in Future Settlements

On Wednesday, the SEC’s enforcement director Robert Khuzami said in an interview that the agency is reconsidering its policy of allowing companies and individuals to settle charges without publicizing the detailed findings of its investigations. A federal judge recently challenged the agency’s handling of its lawsuit alleging that Bank of America concealed plans to pay billions of dollars in bonuses to employees of Merrill Lynch. Khuzami, a former federal prosecutor, said a change in policy would increase transparency and offer more guidance about why the agency is taking the action it is taking.

CFTC Announces Proposed Rule on Energy Commodities

Gary Gensler, Chairman of the Commodity Futures Trading Commission (CFTC), has proposed a new rule to limit the amounts of oil, natural gas, and other energy commodities that investment firms can buy and sell. Traditionally, commercial companies dominated the commodities markets. Recently, however, investment banks have won exemptions from federal trading restrictions and have been able to trade on unlimited amounts. The limits proposed by the agency would apply to four major energy commodities — natural gas, heating oil, crude oil, and gasoline. This week, the agency began considering similar restrictions in the markets for metals such as silver, gold, and platinum.

Under Gensler’s proposal, bank trading would be capped, limited to twice that of other financial speculators, and routine reports would have to be submitted to demonstrate compliance. Separately, the agency has also proposed tightening existing limits on these other speculators. The public comment period on the proposed rule ends at the end of April.