Financial Services Update

September 7, 2010

Authored by: Matt Jessee

White House Considering New Stimulus Measures

Sources indicate that White House officials have begun considering new measures to stimulate the economy, including an extension of the expired research and development tax credit and new infrastructure spending. However, Democratic Congressional leaders have expressed concern to the White House regarding the difficulties they anticipate in passing even a small stimulus bill, particularly given the success of “Tea Party” Republican candidates in primaries over the August recess. The White House denied a story last week indicating that they are strongly considering a payroll tax holiday geared at getting businesses to start hiring new workers. It remains to be seen what, if any, stimulus measures could get passed by Congress in the current political environment. But with the Congressional midterm elections fast approaching, the push is growing for the White House to take action.

Bernanke Defends Fed’s Role in Financial Crisis

On Wednesday, during testimony before the Financial Crisis Inquiry Commission, Federal Reserve Chairman Ben Bernanke defended the Fed’s policies during the financial crisis in 2008, expressing confidence that the bailout averted a much greater crisis for the U.S. economy. Bernanke also defended the Fed’s involvement in the collapse of Lehman Brothers in September 2008, stating that the Fed did everything within its legal authority to avoid the company’s collapse. With regard to how the Fed’s role will change in the aftermath of the newly enacted Dodd-Frank Wall Street Reform bill, Bernanke said the Fed will have a more active role in managing systemic risk in the economy in order to prevent another collapse such as Lehman’s from happening again.

August Jobs Report Shows Rising Unemployment

On Friday, the Department of Labor released its August jobs report showing the economy lost another 54,000 jobs overall last month, mostly because of the loss of temporary Census Bureau jobs. The report also showed that the unemployment rate rose to 9.6 percent from 9.5 percent. Overall, the government lost 121,000 jobs in August. State and local governments, many of them grappling with severe budget deficits, cut 10,000 jobs, and another 114,000 temporary Census positions came to an end. The total number of unemployed people rose to 14.86 million in August from 14.59 million in July.

More Information
If you have any questions regarding any of these issues, please contact:

Matt Jessee, Policy Advisor
(314) 259-2463

Kip Wainscott, Associate Attorney
(202) 508-6172