Trade Deals Stalled in Senate
On Tuesday, the White House struck a deal with Senate Democratic leaders on the Trade Adjustment Assistance program which has stalled the three pending trade agreements with Colombia, Panama and South Korea for the past five years. However, on Thursday, Republican members of the Senate Finance Committee blocked the trade measures during a markup session because of their opposition to the agreement between the White House and Senate Democrats. The trade assistance program was expanded in 2009 to boost payouts and include service-sector employees as well as factory workers, but those added benefits expired in February. The deal between Senate Democrats and the White House, which Republicans opposed, would extend the additional benefits until 2014.
Fed Announces Final Rule on Debit Card Swipe Fees
On Wednesday, the Federal Reserve Board announced final rules that will limit debit card swipe fees, as mandated by the “Durbin Amendment” under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Fed’s original proposed rule capped the fees at 12 cents per transaction, but the Board passed a final rule that increased the cap to 21 cents per transaction, plus 5 basis points on the amount of the transaction for fraud costs, plus 1 cent for fraud prevention costs. Financial institutions with $10 billion or less in assets, governmental benefit cards, and certain prepaid cards are exempted under the Fed’s rule.
Greece Passes Austerity Program, Awaits Second Bailout
This week, the Greek parliament passed unpopular austerity and privatization programs thereby fulfilling the preconditions for receiving a second bailout. However, on Friday, European finance ministers cancelled a planned meeting for Sunday and indicated they may take as long as two more months to finalize the details of Greece’s long-term bailout. Nevertheless, the ministers are expected to approve a short-term loan installment that will keep Greece from bankruptcy over the summer.
Lagarde Appointed New Head of IMF
On Tuesday, French Finance Minister Christine Lagarde became the first woman and the first non-economist appointed to head the International Monetary Fund, an agency that is facing some of its deepest challenges since its founding 66 years ago. Lagarde, 55, was chosen by the IMF board over Mexican central bank governor Agustin Carstens, leaving the agency in the hands of a European, as it has been for more than 60 years. Lagarde’s five-year term will begin July 5.
Goldstein to Leave Treasury
As speculation begins to swirl about Treasury Secretary Tim Geithner’s possible departure, Jeffrey Goldstein, the Treasury’s Under Secretary for Domestic Finance, announced he would be leaving the Department to return to the private sector. Goldstein has played a leading role in setting up the new council charged with overseeing risk to the financial system and has been deeply involved in the Obama administration’s plans for dealing with mortgage-finance giants Fannie Mae and Freddie Mac.