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Financial Services Update – March 4, 2011

February Unemployment Falls to 8.9%

On Friday, the Department of Labor reported that the nation added 192,000 jobs in February, up from a gain of 63,000 in January. The unemployment rate was down to 8.9 percent, falling below 9 percent for the first time in nearly two years. Altogether, 13.7 million people are unemployed and actively looking.  A broader measure of unemployment, which includes people working part-time because they could not find full-time jobs and those so discouraged that they have given up searching, was listed at 15.9 percent in February, down from 16.1 percent in January.

Congress Passes Stopgap Funding Measure

This week the House and Senate passed a continuing resolution funding the government until March 18, thereby avoiding a government shutdown and cutting $4 billion from current fiscal year spending. House Majority Leader Eric Cantor (R-VA) said Thursday that House Republicans plan to keep cutting spending at a rate of $2 billion a week, through two-week spending bills, until the Senate makes clear its position on a budget for the rest of FY 2011. House Republicans last month passed a bill to finish out the fiscal year, cutting $61 billion from 2010 levels. However, President Obama has issued a veto threat on that bill, saying House Republicans’ cuts are unacceptable. Senate Democrats have said that the non-spending “policy” provisions of the House Republicans’ bill regarding the environment and healthcare will also have to be struck before an agreement can be reached.

SEC Votes to Restrict Bonuses

On Thursday, the Securities and Exchange Commission voted to pass new restrictions on bonuses at large brokers and investment advisers, including hedge funds. The new restrictions are nearly identical to rules proposed by the Federal Deposit Insurance Corp. (FDIC) last month that apply to the banks that the FDIC oversees. The Dodd-Frank Wall Street Reform Act, which mandates the bonus rules, requires seven federal banking regulators to write the rules jointly. The SEC’s proposal will require brokers and advisers with more than $1 billion in assets to disclose the bonus arrangements of their executives, directors and lower-rung employees to the SEC annually. The proposal will also require firms with at least $50 billion in assets to hold half of the bonuses of top executives and heads of business units for three years. Any bonuses would have to be adjusted for losses at the firm after the pay was awarded. A 45-day public comment period follows Wednesday’s vote. A second vote by the commission is required before the proposal can be made final.

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Financial Services Update – Issue 20

Financial Regulatory Reform Bill

On Tuesday, the Senate appointed seven Democrats and five Republicans from the Banking and Agriculture Committees to the conference committee on H.R. 4173, the Wall Street Reform Act, which will negotiate a compromise between the House and Senate versions of the bill. The seven Senate Democrat conferees are Sens. Chris Dodd (D-CT), Tim Johnson (D-SD), Jack Reed (D-RI), Charles Schumer (D-NY), Blanche Lincoln (D-AR), Patrick Leahy (D-VT), and Tom Harkin (D-IA). The five Senate Republican conferees are Sens. Richard Shelby (R-AL), Mike Crapo (R-ID), Bob Corker (R-TN), Judd Gregg (R-NH), and Saxby Chambliss (R-GA).

Also on Tuesday, House Majority Leader Steny Hoyer (D-MD) said the House would not appoint conferees until the week of June 7-11, after the Memorial Day congressional recess. Speculation is that the House’s delay is intended to prevent House Republicans from offering politically painful motions ‘to instruct conferees’ on the floor prior to the appointments. House Financial Services Committee Chair Barney Frank (D-MA) also circulated a memo saying he would pick himself and Reps. Paul Kanjorski (D-PA), Luis Gutierrez (D-IL), Maxine Waters (D-CA), Mel Watt (D-NC), Gregory Meeks (D-NY), Dennis Moore (D-KS) and Rep. Carolyn Maloney (D-NY) as the Democratic representatives from the House to the financial reform conference committee. In the memo, Frank also laid out this proposed timeline, which could include coverage of open meetings on C-SPAN: Tuesday, June 8th: conferees appointed … Wednesday, June 9th: first open meeting of the conference, organizational matters and opening statements only. Tuesday, June 15th, Wednesday, June 16th, Thursday, June 17th: conference meets on substantive issues. Tuesday, June 22nd, Wednesday, June 23rd: conference meets on substantive issues. Thursday, June 24th: conference concludes with formal signing ceremony; conference report filed shortly thereafter. Monday, June 28th: Rules Committee meets to grant rule. Tuesday, June 29th: House passes conference report which gives the Senate three days to pass it before the beginning of the July 4th recess.

On Wednesday, Michael Barr, Assistant Treasury Secretary for Financial Institutions and Diana Farrell, Deputy Director of the National Economic Council, held a joint press conference about the Administration’s position on the financial regulatory reform bill. Both Barr and Farrell repeatedly deflected questions on the derivatives’ desk spinoff provision, authored by Sen. Blanche Lincoln (D-AR), which has drawn fierce opposition from business groups, Republicans and some Democrats. Lincoln, chairwoman of the Senate Agriculture Committee, faces a tough fight in the conference committee to persuade the House and Senate to maintain the provision. Along with the administration, Frank and Dodd have also not indicated they will support the provision in the conference.

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Financial Services Update Issue 13

Financial Services Update Issue 13

April 14, 2010

Authored by: Matt Jessee

Geithner Trip to India and China

Treasury Secretary Timothy Geithner met with top Hong Kong, Beijing, and Indian finance officials during his week long trip through Asia which focused on trade and monetary matters. Meanwhile, the New York Times reported Friday that the Chinese government was preparing to announce that it will allow its currency to rise with increased volatility. China’s currency, known as the renminbi or yuan, has been pegged at a nearly fixed rate to the dollar for many years. While an official announcement on China’s currency policy may be delayed, the Times reported that China’s central bank appears to have prevailed within the Chinese governmental leadership for a stronger but more flexible currency. Geithner has refrained from publicly commenting about the currency issue in advance of his meetings in Beijing.

 Senate Financial Regulatory Reform Bill

Senate Banking Committee Ranking Member Richard Shelby (R-AL) offered to Chairman Chris Dodd a new draft compromise on the consumer protection title of the financial reform bill this week, reflecting a possible shift in the Republican position on the issue. According to sources close to Shelby, the new draft is much closer to the language Dodd and other Democrats have sought, which gives much stronger consumer protection authority to the new agency. However, the new Shelby language is said to also give a new council of regulators the power to veto rules from the agency. Shelby’s proposed compromise may reflect Republicans’ increasing willingness to appear amenable to financial reform.

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