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The Economist - After the Senate bill was passed, Mr Obama pledged to “ensure that we arrive at a final product that…secures financial stability while preserving the strengths and crucial functions of a financial industry that is central to our prosperity and ability to compete in a global economy.” That remains to be seen. If the history of financial legislation is a guide—just think Sarbanes-Oxley—the new law will have more than a few unintended consequences. For now, though, the White House can revel in a political triumph that a year ago seemed to many to be beyond reach.

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The Economist – “This plan was not just about preventing Greece’s sovereign-debt crisis spreading to Portugal and Spain. It was about stemming a growing financial panic that could have plunged the world economy back into the quagmire from which it has spent the past two years struggling to escape….

This plan buys time, but it does not repair the fiscal and structural flaws that led the euro zone into this mess in the first place. Worse, it comes with risks attached that Europe urgently needs to deal with. “

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The Economist – “Even as negotiators from the European Union and the IMF are haggling with the Greek government over an ever-growing bail-out package, the yield on Greek debt has ballooned: two-year bonds soared towards 20% this week. Portugal’s borrowing costs jumped. Spain’s debt was downgraded, along with Portugal’s and Greece’s, and Italy came worryingly close to a failed debt auction. European stockmarkets have slumped and the euro itself fell to its lowest level in a year against the dollar.”

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WSJ - The U.S. Treasury Department approved a sale of 1.5 billion shares of Citigroup Inc. common stock in a step toward reducing its 27% stake in the Wall Street firm…The Treasury received the shares in connection with Citigroup’s participation in the Capital Purchase Program under the federal bailout package. It is estimated that the Treasury’s eventual sale of 7.7 billion Citigroup common shares will raise about $32 billion. After the initial 1.5 billion shares are sold, the Treasury said it expects to give Morgan Stanley more authority to auction additional shares. However, these sales don’t cover the Treasury’s holdings of Citigroup trust preferred securities or warrants for its common stock, which will be disposed of separately.”

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Martin Wolf - FT – “It is hard to regulate finance against the incentives of those who run it. Fixing the problem has to include changing incentives in simple and transparent ways. To put it bluntly, participants have to fear the consequences of making serious mistakes, not just be told to stop.”

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WP – “In one of its first broad surveys since the recent recession gave way to renewed growth, the agency said that ‘sovereign risk’ — the chance that sovereign nations have racked up so much debt they won’t be able to borrow enough money to pay their bills — is now perhaps the central threat to the global financial system.”

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SEC sued Goldman Sachs to break an impasse

April 20, 2010

Washington Post – “The suit asserts that Goldman defrauded investors when it sold them a subprime-mortgage investment in 2007 that was secretly designed to lose value. The agency alleges that Goldman created and marketed the investment without telling its clients that Paulson & Co., a prominent hedge fund, had helped the bank assemble the investment [...]

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Defaults rise in loan modification program

April 14, 2010

Defaults rise in loan modification program http://www.nytimes.com/2010/04/15/business/15mortgages.html?ref=business NYT – “The number of homeowners who defaulted on their mortgages even after securing cheaper terms through the government’s modification program nearly doubled in March, continuing a trend that could undermine the entire program…The Treasury Department said it could not explain the growing number of what it called [...]

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Bernanke cautions on economic recovery

April 14, 2010

WP – “Bernanke sounded the same restrained tone in describing his expectations that he did in testimony back in the winter. ‘On balance, the incoming data suggest that growth in private final demand will be sufficient to promote a moderate economic recovery in coming quarters,’ Bernanke said in prepared testimony. He added later that, ‘if [...]

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Arbiters Hold Off on Declaring End to Recession

April 12, 2010

NYTimes – “A  committee of economists, charged with determining the beginnings and ends of recessions, confirmed Monday that it cannot yet declare an end to the recession that began in December 2007. ‘Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would [...]

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