From AFL-CIO president Richard Trumpka:

So, the financial services industry says it wants to “earn back the trust of the American people.”

That must mean it’s loosening up loans to small businesses and investing money in communities hard hit by the nation’s jobs crisis, right?

Actually not. According to the Financial Services Roundtable, which represents the 150 largest banks and insurance companies, “earning back the trust of the American people” means spending millions of dollars on a public relations campaign to make Big Banks look warm and fuzzy.

Here’s a message for the corporations that took $700 billion in our taxpayer bailout dollars: America’s 17 million jobless workers can’t feed their families on PR.  Link to article…

From Reuters:

Fannie, Freddie may fill Fed void in mortgage market

With the Federal Reserve ending its 15-month $1.25 trillion mortgage bond buying binge on Wednesday, delinquent loan buyouts by Fannie Mae and Freddie Mac could serve as the saving grace for the $5 trillion agency mortgage-backed securities market.

The paydowns from these buyouts will put billions into the hands of mortgage investors for reinvestment and significantly reduce supply, mitigating the massive void the central bank will leave behind and helping keep yield spreads near record tights.

That is good news for the U.S. housing market since it should keep mortgage rates, which are linked to yields on Treasuries and yields on mortgage-backed securities, at historically low levels.  Link to article…

From  the New York Times:

Pro-Business Lobbying Blitz Takes on Obama’s Plan for Wall Street Overhaul

 

WASHINGTON — With the Obama administration looking to score another major legislative victory, an array of pro-business groups and fiscal conservatives are mounting a well-financed campaign to scale back or block altogether the Democrats’ plan to overhaul regulation of the financial industry.

By the time the campaign is over, opponents of regulation plans will probably have spent tens of millions of dollars to lobby Washington lawmakers, run advertisements and start petition drives. It is an effort that many of the players, from the United States Chamber of Commerce down to smaller splinter groups, see as vital to their economic survival.

“This is a re-ordering of our financial institutions for generations to come,” Paul Schott Stevens, president of the Investment Company Institute, said last week at a meeting hosted by the chamber.

Wall Street executives say that although they support increased regulation, the changes sought by Democrats could exacerbate the problems that emerged in the 2008 economic crisis rather than fix them. Among the targets of their criticism are the creation of a consumer fiscal protection agency, the establishment of a multibillion-dollar fund to head off bailouts of companies deemed “too big to fail,” and the regulation of derivatives as well as other high-risk trading instruments.  Link to article…

From the San Jose Mercury News:

SACRAMENTO, Calif.—Gov. Arnold Schwarzenegger on Thursday signed a bill aimed at selling California’s vacant homes and encouraging new construction by extending a $10,000 state tax credit for first-time homebuyers.The governor signed a bill the state Legislature passed on a bipartisan vote earlier this week. It provides a state tax credit to first-time homebuyers who buy new or existing homes from May 1 until the end of 2010.

Homebuyers can claim 5 percent of the purchase price against their California taxes, or up to $10,000.  Link to articel…

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In case you wonder who stands in the way of financial reform, from ThinkProgress.org:

This week, Senate Banking Committee Chairman Chris Dodd (D-CT) released the latest version of his financial regulatory reform bill, which aims to correct the deficiencies in the financial system that led to 2008’s economic crisis. The House of Representatives has already passed a comprehensive regulatory reform bill, and now that Dodd has given up on negotiating with recalcitrant Republicans, he is moving on an expedited timeline, with a markup scheduled for Monday.It’s taken the Senate a year and a half after the financial crisis to even get to this point, but House Minority Leader John Boehner (R-OH) told “an enthusiastic crowd of bankers” today that, even if the Senate passes a bill, reconciling it with the House version will take another year. “If the Senate is able to produce a bill, I think it’s just as likely that we’ll be talking about the same issue a year from now as we are right now,” Boehner said at the American Bankers Association government relations summit.  Link to article…

From CNNMoney:

Added incentives for banks to make Small Business Administration-backed loans will continue through the end of March, thanks to a fresh funding infusion authorized by Congress as part of Tuesday’s bill extending unemployment benefits.

The unemployment benefits extension bill — passed by the Senate and signed by President Obama late Tuesday after Sen. Jim Bunning, R-Ky., dropped his objection — allocates $60 million to fund the program’s subsidies for another month.  Link to article…

From CNNMoney.com:

NEW YORK (CNNMoney.com) — Bank of America spent $4.4 billion last year on its Wall Street bankers , according to a person familiar with the matter.

The nation’s largest bank used 19% of the $23 billion in revenues it generated in 2009 within its markets and investment banking businesses to pay workers’ salaries benefits as well as year-end bonuses.

That works out to an average of about $440,000 per employee. The bank has roughly 10,000 workers in its markets and investment banking units.

Bob Stickler, a spokesman for Bank of America (BAC, Fortune 500), would not confirm the figures, although he said that the company tried to walk a fine line when it structured worker pay this year.

“We are trying to balance the need to pay competitively and to respond to concerns about the level of compensation on Wall Street,” said Stickler.   Link to article… 

From CNNMoney.com:

NEW YORK (CNNMoney.com) — President Obama will call on Congress Tuesday to recycle $30 billion of the remaining Troubled Asset Relief Program (TARP) funds into a new government lending program offering super-cheap capital to community banks that boost their small business lending this year.   Link to article…

From The Huffington Post:

President Obama won’t tell us in his State of the Union address. The deficit hawks won’t crow about it. Don’t expect the Tea Party or Rush and Beck to highlight our generosity either. But the sad fact is this: During the worst year since the Great Depression, with 30 million people out of work or forced into part-time jobs, Wall Street is awarding itself $150 billion in bonus money…..and it comes from us!

That’s $500 for every man, women and child in the country — $2,000 for a family of four. (Maybe we should try deducting it from our income taxes as a charitable donation.)

Had we not bailed out the financial sector, there would be no bonus pool this year. Zip, zero, ziltch.  Link to article…

From Market Watch:

Rep. Ed Towns, D-N.Y., chairman of the House Oversight and Government Reform committee, said the bailout “creates an air of suspicion and distrust among the American people.” He expressed concerns about the decision by the New York Fed to try to keep the names of derivative counterparties of AIG receiving taxpayer bailouts private. Under pressure from Congress, the names of derivative counterparties were eventually disclosed.

“The New York Fed argued that disclosing the names of the counterparties would somehow injure AIG,” Towns said. “In fact, when the information was finally released under pressure from Congress, nothing happened…But it did have an effect on the credibility of the Federal Reserve and it called into question the Fed’s penchant for secrecy.”

The Federal Reserve’s use of its extraordinary powers to assist AIG has angered many members of Congress of both political parties. Lately, lawmakers have expanded their criticism of the Obama administration’s bailout efforts, which they contend resulted in expanded benefits to Wall Street at the expense of Main Street.

“The government gave Goldman Sachs more than it had any right to expect, but at the same time no financial relief was given to millions of Americans facing a foreclosure crisis,” said Rep. Dennis Kucinich, D-Ohio.  Link to article…

From the BBC today:

AIG was initially bailed out for $85bn (£52bn), but its total rescue package has since amounted to more than $180bn.  Link to article…

From the NY Times and CNBC:

Mr. Barofsky’s report on the uses of government money found that some institutions had applied it to projects that directly contradicted the Congressional intent for the program.

The public seems pleased that someone is standing up to the banks and the officials who bailed them out. A Web site that Mr. Barofsky set up for tips has received about 30 million hits, he said. And Congress expanded his powers last year.

He made his most recent waves in November, when he issued the results of an eight-month audit of how tens of billions of dollars, sent by the government to a teetering A.I.G., wound up at a group of big banks in the United States and Europe.   Link to article…

Quitely astutely explained, from The American Scene:

Finance professionals, like members of all occupational categories, attempt to build barriers that maintain their own income. One of the techniques used is to shroud what are often pretty basic ideas in pseudo-technical jargon. The reason that it is dysfunctional to have an insured banking system that is free to engage in speculative investing is simple and fundamental. We (i.e., the government, which is to say, ultimately, the taxpayers) provide a guarantee to depositors that when they put their savings in a regulated bank, then the money will be there even if the bank fails, because we believe that the chaos and uncertainty of a banking system operating without this guarantee is too unstable to maintain political viability. But if you let the operators of these banks take the deposits and, in effect, put them on a long-shot bet at the horse track, and then pay themselves a billion dollars in bonuses if the horse comes in, but turn to taxpayers to pay off depositors if the horse doesn’t, guess what is going to happen? Exactly what we saw in 2008 happens.  Link to article…

From the NY Times:

The Obama administration plans next week to revamp its $75 billion program aimed at sparing homeowners from foreclosure, streamlining the documents required of borrowers seeking lowered payments, according to financial industry executives and others who have met in recent days with Treasury officials.

The latest effort to accelerate the Making Home Affordable program — now widely viewed as a disappointment — comes as the administration faces growing pressure to do less for banks and more for households struggling with double-digit unemployment.  Link to article…