Finance Space

There is a debate taking place in Washington about whether we will hold Wall Street accountable and protect consumers.

America has endured a financial crisis as dire as any we’ve known in generations.

It nearly dragged our economy into a second Great Depression. It forced taxpayers to foot the bill for irresponsible practices on Wall Street. And it helped lead to the loss of trillions of dollars in family savings and more than 8 million jobs across America.

Yet two years since the height of this financial crisis, the same system of rules and oversight remains in place. And the status quo means our economy — and taxpayers — remain vulnerable to another disaster.

US Senate Banking Committee Chairman Chris Dodd made a last-minute amendment to a massive financial overhaul bill to resolve a dispute over derivatives.

The Democrat’s measure would postpone any action on the complex financial instruments for two years so it can be studied by a new council of regulators headed by Treasury Secretary Timothy Geithner.

Derivatives are blamed for overheated speculation that fueled the global financial collapse of 2008.

Dodd’s move sought to overcome a major outstanding issue on Wall Street reform, as the US Senate set the stage for a final vote as early as this week on the overall financial legislation.

The rating agencies that sort good investments from junk are once again injecting fear into financial markets. Only this time it’s for warning investors about a possible threat — Europe’s debt crisis — rather than for failing to see one coming.

Why do their words carry so much weight?

These are the same firms that gave safe ratings to high-risk U.S. mortgage investments that later imploded and caused the financial crisis. Those failures raised doubts about how much the assessments of rating agencies like Standard & Poor’s, Moody’s Corp. and Fitch Ratings are really worth.

Senate Republicans voted to block a bill aimed at tightening regulation of the financial system from being debated yesterday, in a move President Barack Obama said American people “can’t afford”.

The Democrats needed 60 votes from the 100 senators in the house to begin debating the bill, which proposes a government levy on big banks, changes to rules on derivatives trading and the establishment of a consumer financial protection agency.

The White House officially endorsed the bill before the vote, and had been hoping that the $1bn (£650m) fraud prosecution of Goldman Sachs would give fresh wind to anti-Wall Street sentiment, making the case for accepting the proposals unavoidable.

Federal law enforcement agencies have begun a criminal investigation of the use of credit cards issued by the Republican Party of Florida to elected officials and staff members, according to sources familiar with the inquiry.

The U.S. attorney’s office in Tallahassee, the FBI and the Internal Revenue Service are involved in the probe. It grew out of a state investigation of former Florida House speaker Ray Sansom, who was indicted on criminal charges that he stashed $6 million in the state budget for an airplane hangar for a friend and campaign donor.

Wells Fargo & Co. said Wednesday that its first quarter profit fell on costs to integrate the acquired Wachovia and rising provisions.

The firm said some operating metrics improved and that credit issues appear to have “turned the corner.”

Wells said Wednesday that it earned $2.55 billion, or 45 cents a share in the quarter, compared to $3.05 billion, or 56 cents a share a year ago.

Wells was expected to make 42 cents a share, according to the average estimate of 20 analysts polled by FactSet. Forecasts ranged from 20 cents to 51 cents a share.

Barack Obama on Thursday takes his campaign against Wall Street ‘irresponsibility’ to New York, the epicentre of US high finance, as he seeks to swiftly drive regulatory reform into law.

The president will touch down for just a few hours in central Manhattan, to give a speech aimed at Americans in the heartland, finance barons in their sleek corporate headquarters, and Republican lawmakers back in Washington.

President Obama was expected to lay out a case for reforming risky and bloated Wall Street practices, to Americans still trapped in a tough economic climate, and to implore big financial firms to join, not block his overhaul.

THE global credit crunch was universally painful. The recovery has been uneven. Many large companies can once again raise money with ease in capital markets. But life remains much tougher for the small and medium-sized firms that mostly rely on banks and commercial-finance companies to provide them with loans. As these lenders have cut back, terms have tightened: spreads on loans of between $100,000 and $1m rose by a percentage point in 2009, reaching their highest levels in over a decade, according to the Federal Reserve.

Credit card delinquency rates fell last month at major U.S. lenders, including Bank of America Corp and JPMorgan Chase & Co, in the latest sign that Americans are starting to climb out of the recession.

On the downside, credit losses from uncollectable loans were still high, and worsened for JPMorgan, Capital One Financial Corp and American Express Co, according to regulatory filings by the companies on Thursday. And credit losses for many lenders were up from a year earlier.

But delinquencies are a better gauge of future loan performance, and with fewer consumers late on their bills, the outlook for credit losses over the summer may be improving.

As the economy begins to mend, the cost of borrowing money for a big purchase could start to increase.

Mortgages, in particular, have flirted with record lows during the recession. Credit card rates have been bouncing upward and, while auto loan rates are expected to stay low for a little while longer, they can’t stay low forever.

The Federal Reserve has played a key role in keeping the cost of borrowing so low, through the so-called fed funds rate, a benchmark that determines the interest paid by consumers and businesses on a wide variety of loans. That has been near 0% since December 2008, as the central bank worked to spur greater lending and economic activity.