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.”
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.”
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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The Senate votes for financial reform, but important issues remain unresolved
by jdebnam on May 21, 2010
in Economic Commentary,Proposed Solutions,Regulatory Overhaul
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.