6. May 2009 by admin.

 So much for backtracking (see below).  Newrooms Solutions reports that Illinois Governor Patrick Quinn is still calling for votes from the General Assembly on each part of his Illinois Reform Commission’s recommendations.  Legislators are still falling back on the fact that no bills yet exist to meet this demand. 

(Chicago) — Illinois Governor Pat Quinn says he may have to use all of his leverage to get reforms through the Illinois Capitol this spring.With less than a month until lawmakers are set to leave for the summer, Quinn says he is not willing to compromise on his reform commission’s six part plan.

The Governor says “we have to get all” reforms pitched by the group of statehouse outsiders.

That would include campaign contribution caps, term limits for legislative leaders, a new way to draw the state’s political map, and even recall for voters.

But Quinn’s office has yet to turn any of the ideas into proposed laws.

http://mystateline.com/content/fulltext/?cid=64871

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6. May 2009 by admin.

WASHINGTON (AP) — The head of the Federal Deposit Insurance Corp. says new powers are needed to oversee companies that pose financial risks to the economy, an authority that could be shared by the FDIC and other regulators.

In testimony at a Senate hearing, FDIC Chairman Sheila Bair calls for a new system of supervision that prevents institutions from taking on excessive risk and becoming so large their failure would threaten the financial system.

She suggests the Treasury Department, FDIC, Federal Reserve and Securities and Exchange Commission could be members of a new ‘’systemic risk council” set up to monitor large institutions and potential risks to the system.

Bair stressed again that the ”too big to fail” policy used by the government in the financial crisis must end.

http://www.nytimes.com/aponline/2009/05/06/us/politics/AP-Meltdown-Too-Big-to-Fail.html?_r=1&ref=global-home

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6. May 2009 by admin.

The public relations campaign packaging the bank stress tests is kicking into high gear and our professional information managers are really hitting their stride.  They face, of course, a classic spin problem: you need to get the information out there, but you don’t want to be too definitive on the first day or soon after - if you’re easy on the banks, that looks bad; if you’re tough on the banks, that might be dangerous.

The best way to handle this is by jamming your own signal - which they are starting to do in brilliant fashion.  To the WSJ you leak that BoA needs to raise a great deal of capital ($35bn); they run this story on the front page, next to a great frown on the face of Ken Lewis.  But you tell the FT that Citi will need “to raise less than $10bn” (note that the on-line FT version of this story, as of 8:30am Eastern, seems to have been adjusted downwards relative to the print edition that arrived at my house 4 hours ago.)  The NYT yesterday sounded quite upbeat.

SIMON JOHNSON, baselinescenario.com

http://baselinescenario.com/2009/05/06/is-everyone-confused-yet-bank-stress-tests/#more-3552

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6. May 2009 by admin.

By BINYAMIN APPELBAUM

The Washington Post 

The Obama administration’s plan to “stress-test” 19 large banks is yielding benefits even before the findings are released tomorrow.

The announcement of the tests in February roiled the markets initially. But the 12-week wait for results has since provided a respite, allowing investors to breathe deeply and giving time for a raft of federal rescue programs to start showing results.

The banks, eager to demonstrate that they don’t need more federal aid, have spent the time racing to get stronger. The healthiest banks, such as Goldman Sachs and J.P. Morgan Chase, have tried to show that they can walk without government crutches, for example by issuing debt without federal assistance. Weaker banks such as Citigroup have agreed to sell valuable business units and moved with greater urgency to offload troubled assets.

The main purpose of the stress tests remains largely unfulfilled. Federal officials want banks to raise more capital, from the government if necessary, so that they will have the financial strength to increase lending and help lift the economy from recession. The success of that process, which begins tomorrow and could take six months, ultimately will depend in large part on whether investors believe the government’s assertion that many banks are healthy and deserving candidates for new investment. Otherwise, investors might not provide the needed capital.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/05/AR2009050503229.html?hpid=topnews

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6. May 2009 by admin.

By DEBORAH SOLOMON and DAMIAN PALETTA

The Wall Street Journal

WASHINGTON — Banks that want to return Troubled Asset Relief Program funds will have to demonstrate their ability to wean themselves off another major federal program, according to senior government officials, making it less attractive for some banks to return the money.

The other program, a guarantee of debt issuance offered by the Federal Deposit Insurance Corp., allows firms to borrow money relatively inexpensively. Banks have $332.5 billion of debt outstanding under this program, which began last fall.

Regulators are expected to detail the complete set of guidelines on how banks can repay TARP as early as Wednesday. The guidelines signal a potential turning point in the financial crisis, with the government and some banks beginning to unwind federal involvement in the industry.

Several banks have been chomping at the bit to return their TARP funds, in part to prove their financial health, but also to escape from tough rules governing executive compensation, dividend payments and stock repurchases.

http://online.wsj.com/article/SB124156005555589031.html

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6. May 2009 by admin.

Is Governor Quinn playing the game?  From a demand on an up or down vote on his reform commission’s recommendations, some daylight is appearing between the Governor and Illinois Reform Commission report.

By DEANNA BELLANDI

The Associated Press

CHICAGO - With less than a month left in the legislative session, Gov. Pat Quinn is still talking only in broad outlines about the ethics reforms he wants, refusing to say which ones he considers most important or how he plans to get them passed.

Quinn said his Illinois Reform Commission has issued a “blue print” to fix what’s wrong in the state, but he would not say Tuesday which of the reforms in the commission’s 88-page report were the most important to pass.

“I don’t want to pick one area over another,” Quinn said after addressing a Rotary luncheon at a downtown private club.

Quinn appointed the commission to come up with a way to clean up state government in the wake of the scandal surrounding Rod Blagojevich, removed from office by lawmakers in January after his arrest on federal corruption charges.

The reform commission has recommended everything from capping campaign donations and strengthening public records laws to term limits for legislative leaders.

But those are just well-intentioned ideas until they’re put into bills that lawmakers can vote on, said Rikeesha Phelon, a spokeswoman for state Senate President John Cullerton.

http://www.southernillinoisan.com/articles/2009/05/05/ap-state-il/d980bk4g2.txt

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