Geithner Pushes For Oversight (WSJ)
At the Congressional hearing today we're going to hear Geithner's best on systemic risks to economy, and changes necessary to prevent them going forward (there's good reasons for not making brash decisions when emotions are high, you end up with things like the Patriot Act). There's talk of changes to the rules of risk management in Banks, though we're not entirely sure what that might look like; the only thing concrete that we've seen from the Administration thus far is that they want the ability to seize or take over any institution that's imminent collapse could cause damage to the economy. Good stuff.
"One area where the U.S. is departing from its European allies is the Obama administration's approach to hedge funds, private-equity firms and venture-capital funds. Mr. Geithner is expected to ask Congress to require all of these firms over a certain size to register with the Securities and Exchange Commission and disclose certain information so government officials can determine whether their size or complexity puts the broader economy at risk."
AIG Managers In Paris Resign, Billions Could Default (WSJ)
"The executives at Paris-based Banque AIG, Mauro Gabriele and James Shephard, have resigned in recent days but have agreed to stay on for a transition, according to people familiar with the matter. In the wake of their resignations, AIG must replace them to the satisfaction of French banking regulators.
If they don't, French regulators may appoint their own designee to manage the bank -- an outcome that could trigger defaults under the bank's derivative contracts. The private contracts say that a regulator's appointment of a manager constitutes a change in control, according to a person familiar with the matter; the provision is often included in derivative contracts where parties want to preserve a way out if something about their counterparties changes."
EU Leader Condemns US "Road To Hell" (FT)
I'm sure it wasn't meant like that, probably a cultural difference. Something lost in translation, or maybe, I dunno - he's been drinking?
""The US Treasury secretary talks about permanent action and we, at our spring council, were quite alarmed at that . . . The US is repeating mistakes from the 1930s, such as wide-ranging stimuluses, protectionist tendencies and appeals, the Buy American campaign, and so on," he told a European parliament session in Strasbourg. "All these steps, their combination and their permanency, are the road to hell.""
PIMCO Calls For Fed To Double Balance Sheet (Reuters)
I'll leave it to you: Genius or Mad Man?
"Bond giant Pacific Investment Management Co said the Federal Reserve needs to double its balance sheet up to $6 trillion to replace the amount of wealth destroyed in the United States, an executive said on Thursday.
Liabilities on the Fed's balance sheet should rise to between $5 trillion and $6 trillion later this year amid the financial crisis that roiled global markets, said Brian Baker, chief executive Pimco Asia Ltd.
"Right now, the Fed has spent about $3 trillion. We believe there has to be further stimulus policies put in place," Baker told Reuters."
Barclays Officers Land In Hot Seat (WSJ)
So, here's what's up: the kids over at Barclays have been doing their best to keep the bank from Government control (kind of not easy in Britain), but it doesn't look like they're going to be successful. Meanwhile, not only have they put themselves up for re-election early for the board seats, but they've been trying to sell all kinds of shit. Oh, and also, if they try to raise capital they turn control of the bank over to investors from the Middle East:
"Along the way, Messrs. Varley and Agius have made some calls that are now putting them in a tough spot. Last fall, in an effort to avoid government ownership, the bank raised £7 billion from investors from Qatar and Abu Dhabi, who received securities similar to preferred shares paying 14% annual interest.
The deal includes a clause that could give the Middle Eastern investors control of the bank if Barclays issues shares to raise fresh capital before June 30. Many shareholders still are angry that they initially didn't get the same terms, according to a person familiar with the matter."
Governments Unwilling To Prosecute Pirates (Bloomberg)
While it's clear they could prosecute them, they're not - it's just too much of a pain in the ass, apparently. So this is really more like a pirate catch and release program, pirate fishing?
Geithner Pushes For Oversight (WSJ)