August 31

By Roosevelt Institute |

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

Wall Street Stealth Lobby Defends $35 Billion Derivatives Haul (BLM)
Wall Street is suiting up for a battle to protect one of its richest fiefdoms, the $592 trillion over-the-counter derivatives market that is facing the biggest overhaul since its creation 30 years ago.

As Big Banks Repay Bailout Money, U.S. Sees a Profit (NYT)
The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually.

This is No Time to Throw Away the Crutches (FT)
Peter Clarke warns not to to forget the frightening precipice over which we peered only a few months ago.

In Kennedy, the Last Roar of the New Deal Liberal (NYT)
No major political figure of the past half-century was so deeply invested in the vision of liberalism begun by the New Deal of Franklin D. Roosevelt, as Mr. Kennedy was.

Time to Get Tough with AIG (Reuters)
There’s no reason for the federal government to be acting as a mere bystander in dismantling the insurer and getting the taxpayers’ money back.

Raft of Deals for Failed Banks Puts U.S. on Hook for Billions (WSJ)
Through more than 50 deals known as “loss shares,” the FDIC has agreed to absorb losses on the detritus of the financial crisis.

FDIC to Ratchet Up Scrutiny of Newly Chartered Banks (WP)
New banks will face tighter oversight under federal rules, as the FDIC looks to minimize the potential for payouts to depositors at troubled institutions.

New Rules for Private Equity (NYT)
F.D.I.C. must signal that private equity firms are unsuited for banking — a business that has a public purpose and regulatory obligations, along with the potential for profits.

Frank Said to Back Broader Fed Audits (WSJ)
Rep. Ron Paul said he has a commitment from the chairman of the House Financial Services Committee, Barney Frank, to advance legislation opening the Federal Reserve to broader federal audits.

Lehman Faces Up to $100bn in Claims (FT)
Lehman Brothers’ European businesses plan to lodge claims for as much as $100bn against their former holding company in the coming weeks, as the winding up of the collapsed US bank gathers pace.

Economists Are Split on Inflation (WSJ)
Half of 266 members of the National Association for Business Economics surveyed in August said the Fed’s decisions to increase the money supply won’t lead to inflation in the next few years.

Central Banks Can Adapt to Life Below Zero (FT)
Wolfgang Münchau writes the zero lower bound is one of the great myths of monetary economics.

Blue Chip, White Cotton: What Underwear Says About the Economy (WP)
For one predictor of when the recession will end, take a peek inside a man’s underwear drawer.

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