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…

From MarketWatch:

HONG KONG (MarketWatch) — Most Asian markets ended lower Wednesday, as concerns China may step up its tightening measures to cool a rapidly growing economy hit banking and resource shares hard.

Several other regional markets also reversed direction or pared early gains made after a strong finish on Wall Street, after the Chinese banking regulator said the nation’s banks were expected to make fewer loans this year than in 2009. Japan’s Nikkei 225 and Taiwan’s Taiex fell 0.3% each, while Australia’s S&P/ASX 200 ended 0.1% up — well off the day’s high.  Link to article…

Here is one that piques my interest from The NY Times and CNBC:

President Obama on Tuesday stepped into the middle of a fierce lobbying battle by reinforcing his support for an independent agency to protect consumers against lending abuses that contributed to the financial crisis. The president’s move also signaled a tougher line and a more direct role as Congress weighs an overhaul of banking regulation.

The financial industry and Congressional Republicans have singled out the administration’s proposed consumer agency in particular, hoping to greatly weaken if not kill it. With liberal Democrats and Web commentators fighting just as hard for a strong independent office, the issue is becoming the central flashpoint in the debate over regulation.  Link to article…

Quite a healthy skewering of the banking executives here on The Daily Show that I thought was worth passing on.  Huge bonuses for our “fragile” banks are an awfully counter-intuitive proposition.  But if you don’t pay the huge bonuses, you may lose the best talent, ”like professional athletes or movie stars,” says one commenter from Goldman Sachs. 

Stewart replies, ”I guess the only real difference between bankers and movie stars is that when Nic Cage lost all his money I didn’t have to bail him out!”   

See the video here.

MBS- FNMA 4.5 price: 101-05 closed.

10-yr Treasury Yield: 3.55% closed.

Well, it appears SOMEBODY in Washington gets it:

House Passes Far-Reaching Bill Tightening Financial Rules:

The vote is the most significant legislative act to confront the financial crisis that exploded last year since the vast and costly bailout that was rammed through Congress at the peak of the emergency. It was an effort to address comprehensively what many of the bill’s supporters have called the underlying causes of the collapse — reckless risk-taking unrestrained by regulation.  Link to article…

But was the legislation mutilated by industry lobbying, leaving it ”riddled with loopholes“?   

The bond market and many lenders were closed today so it was a chance for me to catch up on some reading for the most part.  But interspersed between segments of the day I definitely found myself thinking about veterans.  My grandfather was a veteran of WWII, and he became a career Air Force man after that.  Like most veterans of wars, he never talked much of the war’s terrible toll.  Instead he chose to tell stories such as how he met my grandmother in Norwich, England.  Good times were there too, and I am sure it’s far more appealing to think of them when talking to your grandson. 

I don’t have a long-winded bit to say today, but I did want to mention what’s written on the medal my grandfather received from serving in WWII.  It hangs in my office because I thought the significance of it was substantial, both as an heirloom for me and also as a measure for me to keep perspective in trying times.  With a band around the perimeter of the medallion that says United States of America 1941-1945, here is what it says:

FREEDOM

FROM FEAR AND WANT

FREEDOM OF SPEECH

AND RELIGION

All I really want to say to the veterans is THANKS.