August 27

By Roosevelt Institute |

daily-digest-150What you need to know to navigate today’s economic debate.

Hedge Fund Boss Accuses PM of Ignoring Crunch Alarm Bell (London Evening Standard
Short-seller Jim Chanos issued warnings at G7 meetings two years ago on impending economic collapse. Why was no one listening? Stay tuned for exclusive interview with Chanos on ND20. 

How Kennedy Changed Chapter 11 (DealBook)
Mr. Kennedy inserted a provision in the bankruptcy reform law of 2005 that tried to stop the big bonuses that bankrupt companies routinely gave their top executives as an inducement not to leave.

Overmighty Finance Levies a Tithe on Growth (FT)
Benjamin Friedman writes what makes a more efficient financial system worthwhile is not just that it allows us to achieve greater production and economic growth, but that the rest of the economy benefits.

The Dangers Ahead for Bernanke (RoomDebate)
Leading economist and policymakers discuss what the biggest challenge Mr. Bernanke faces in his second term and what kind of room will he have to maneuver, given a projected $9 trillion over the next decade?

New Rules Restrict Bank Sales (NYT)
Facing a dearth of traditional bank buyers, the F.D.I.C. board tried to strike a balance between the need for fresh capital to shore up the banking system

Pay Czar Is Expected to Clear AIG Chief’s Compensation (WSJ)
The Obama administration’s pay czar is expected to formally approve the $10.5 million pay package for American International Group Inc.’s new chief executive as early as next week.

Federal Reserve Says Disclosing Emergency Loans Will Hurt Banks (BLM)
The Fed argued yesterday that identifying the financial institutions that benefited from its emergency loans would harm the companies and render the central bank’s planned appeal of a court ruling moot.

Hopeful Signs: Manufacturing, Housing Show Gains (WP)
Manufacturing and housing, two sectors that have suffered some of the largest job losses in this recession, showed signs of strengthening in July.

Loans That Looked Easy Pose Threats to Recovery(NYT)
Since February, default and foreclosure rates on option ARMs have passed those of subprime mortgages, in part because so many subprime mortgages have already failed.

U.S. Economy Probably Contracted More Than Initially Estimated (BLM)
Gross domestic product shrank at a 1.5 percent annual rate from April to June compared with the 1 percent drop reported last month, according to the median forecast of 75 economists surveyed by Bloomberg News.

Does the World Need a Global ‘Tobin Tax’? (FT)
Some three decades ago, James Tobin, the economist, first proposed introducing a tax on financial transactions to redistribute banks’ excess profits.

Barbarians Back at Bank Gates (CNN)
As failing banks pressure the FDIC’s deposit insurance fund, regulators reach out to private equity investors for help.

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