January 6, 2011: Geithner Warns Congress: Don't Play Games on Debt Limit [NEWSLETTER]

Conversation Starter

Treasury Secretary Timothy Geithner said on Thursday that the United States may hit the legal limit on its ability to borrow by March 31 and faces serious consequences unless Congress acts by then to raise it. Geithner said it was hard to pin down exactly when the current $14.3 trillion debt ceiling would be breached. He urged Congress, however, to take action before the end of the first quarter to avoid the risk of pushing the U.S. into default.

See the letter that Geithner sent to Congress here.

Related news stories:

Geithner Warns Congress: Don't Play Games on Debt Limit
By Mark Knoller, CBS News
Facing a new Congress in which Republicans are more dead-set than ever on reducing government spending, Treasury Secretary Tim Geithner served notice that the U.S. government could hit the statutory debt limit as early as March 31 and no later than May 16.
http://jlne.ws/dZqGA6

Geithner presses Republicans to lift U.S. debt limit
By David Lawder and Glenn Somerville, Reuters
U.S. Treasury Secretary Timothy Geithner on Thursday stepped up pressure on Republican lawmakers to raise the nation's $14.3 trillion debt limit, warning failure to act would lead to an economic catastrophe.
http://jlne.ws/hzKfs3

Raise debt limit to avoid national catastrophe, Geithner warns Congress
By Lori Montgomery, The Washington Post
Treasury Secretary Timothy Geithner warned lawmakers Thursday that the national debt could hit the legal limit on federal borrowing as soon as March 31, and he urged them to act quickly to avoid a government default that would spark "catastrophic economic consequences that would last for decades."
http://jlne.ws/eBIMz4


Lead Stories

Obama names moderate Daley as chief of staff
If President Obama wanted a tough manager with sharp political instincts who wouldn't seek the spotlight as his next White House chief of staff, he found his man in William Daley....He comes steeped in business, a quality that has been lacking in the Obama administration. He ran Amalgamated Bank of Chicago before joining the Clinton administration. Since 2001, he has been president of SBC Communications, then Midwest chairman of JPMorgan Chase.
http://jlne.ws/fmaXDt

**CN: Obama brings another Chicago guy to the White House. Daley has strong ties to the banking and Wall Street communities.

PIMCO | Investment Outlook, William H. Gross - Off With Our Heads!
By Cordell Eddings, Bloomberg
Pacific Investment Management Co.’s Bill Gross said investors should favor emerging market corporate and sovereign debt as “mindless’ U.S. deficit spending may result in higher inflation, a weaker dollar and the eventual loss of America’s AAA credit rating.
http://jlne.ws/eEU7Lu

**CN: PIMCO's Gross starts the year off with some strong words in his monthly column on the firm's Web site.

Dodd-Frank and the Return of the Loan Shark
BY TODD ZYWICKI, WSJ.com
The least surprising event of 2010 was that, in the wake of new federal limits on how credit-card issuers can price risk and adjust interest rates, more Americans had to go to payday lenders, pawn shops and local loan sharks in order to get credit. It's simply the latest installment in the old story of regulators thinking they can wish away the unintended consequences of consumer credit regulation.
http://jlne.ws/e8y44E

Banks Boost Income From High-Yield Bonds
Radi Khasawneh, Financial News
Investment banks almost doubled their fees from high-yield bonds last year, topping revenues from investment grade issues for the first time since 2006.
http://jlne.ws/fHg10l

Economy's Overheating? We Should Be So Lucky: Caroline Baum
By Caroline Baum, Bloomberg
Wall Street lives in a world of extremes. Today’s raging bull market may morph into tomorrow’s angry bear. Forecasts of inflation and deflation can be found on the same page. The Federal Reserve’s plans for an early exit from its emergency stimulus were derailed by the need to re-enter the treatment arena.
http://jlne.ws/esORCJ

FRB: Press Release--FOMC statement--December 14, 2010
Information received since the Federal Open Market Committee met in November confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment. Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have continued to trend downward.
http://jlne.ws/g1hn1y

Fed sees fairly high bar for stopping bond buys
By Pedro da Costa and Mark Felsenthal, Reuters
The Federal Reserve felt at its December meeting that the U.S. economy still needed help despite signs of strength, according to minutes released on Tuesday that showed little appetite to trim bond-buying plans.
http://jlne.ws/dGIQrY

CFTC needs "Plan B" for costly swaps rules
By Roberta Rampton , Reuters
The U.S. futures regulator needs to consider a "Plan B" on how it will police the $600 trillion swaps market if Congress fails to deliver a 50 percent increase in its budget, one of its top officials said on Monday.
http://jlne.ws/gXhDmx

Mortgage-Backed Securities to Save Financials?
By Catherine Holahan, CNBC
The "Fast Money" traders were focused on the financial sector early Wednesday morning after reports that three major Wall Street firms were planning to sell $4 billion in mortgage-backed bonds.
http://jlne.ws/iecQ6E

Furor over BofA's $2.8B mortgage settlement
By MARK DeCAMBRE, NY Post
Bank of America is getting blasted with accusations of a "backdoor bailout" for its $2.8 billion settlement with Fannie Mae and Freddie Mac over billions of bad mortgages.
http://jlne.ws/fsARcv

Experts Expect Fewer Bankruptcies in 2011
By Sara Murray, WSJ.com
With consumer bankruptcies at a five-year high, experts are already handicapping this year’s trend — and there’s reason to believe 2011 will be brighter. There are two indications that Americans won’t be quite so overwhelmed by debt this year that they opt to file for bankruptcy. The first is that they’re simply carrying less debt. There was $2.40 trillion in outstanding consumer credit as of October, according to the Federal Reserve. That’s down nearly 4.1% from October 2007, before the recession began.
http://jlne.ws/fdh98W

F.D.I.C. Seeks $2.5 Billion From Execs of Failed Banks
By CHRIS V. NICHOLSON, NY Times
The F.D.I.C. said Tuesday that as of mid-December it had authorized suits against 109 directors and officers of failed financial institutions as it tries to recover nearly $2.5 billion.
http://jlne.ws/eZ8emP

Issuance Plunges 91% From Year Ago as Build America Bonds End
By Brendan A. McGrail, Bloomberg
Municipal-debt issuance plunged 91 percent this week from a year earlier after federal initiatives such as the Build America Bonds program ended Dec. 31.
http://jlne.ws/hkV7EK

Currency Carry Trade Losses Exceeding Lehman Crisis Bolster Dollar Outlook
By Ron Harui and Wes Goodman, Bloomberg
Currency traders that seek profits by borrowing in nations with low interest rates to fund purchases in countries with higher yields are losing more money than at any time in at least a decade.
http://jlne.ws/ig4IFY

Private investors head for hills as default fears mount
By Nicole Bullock in New York
A fierce debate has erupted over the standing of US municipal bonds, the once sleepy corner of the credit markets where states and local governments raise money for roads, bridges, schools and other projects.
http://jlne.ws/hpMNPB

ECB Rate Hike Likely Sooner Than Expected
By Nina Koeppen, WSJ The Source
Strong euro-zone inflation data for December are an important reminder that interest rates won’t stay at current emergency levels indefinitely, and that the ECB may raise rates later this year.
http://jlne.ws/eoZzjl

Fed Likely To Add New Treasury Market Dealers
By Min Zeng, Dow Jones Newswires
After a hiatus of more than one year, the Federal Reserve is likely to expand a select group of dealers to help with hefty Treasury debt sales and the central bank's monetary-policy operations, according to traders and dealers familiar with the matter.
http://jlne.ws/hVmqay

Three risks to start 2011
By Jeremy Gaunt, Reuters
Financial markets enter 2011 with many investors persuaded that the world economy is on the mend and that riskier assets such as stocks are set to do well.
http://jlne.ws/h54N1W

Six Financial Institutions Repay TARP Funds, Deliver $626 Million In Proceeds For Taxpayers
Press Release
The U.S. Department of the Treasury announced that the following six financial institutions have repurchased Troubled Asset Relief Program (TARP) Capital Purchase Program (CPP) investments, delivering a total of $626.0 million in proceeds today for taxpayers.
http://jlne.ws/cxgbC7

Schwarzenegger's Build America Bonds Outperform With 7% Yield: Muni Credit
By Brendan A. McGrail and Ashley Lutz, Bloomberg
Build America Bonds from California, the biggest issuer of the taxable debt in 2010, outperformed the market in the last six weeks as the state’s 7.25 percent yield lured investors unfazed by the lowest state credit rating.
http://jlne.ws/i9gTjU


Events
Introduction to Treasury Futures: Factoring the Risks, New York
When: January 13, 2011
Where: New York
Who: Institute for Financial Markets
Full Info: www.theifm.org
Details: Treasury futures are one of the most popular futures contracts for both hedging and speculating. Some of the factors that influence value in the treasury complex include: interest rate risk, inflation risk, and the willingness of investors to continue buying Treasury debt. These factors lead to volatility in the underlying value of debt instruments as interest rates move up or down. If your business borrows money, you can mitigate the effects of higher or lower interest rates by trading the treasury future complex. Moreover, with treasury interest rate levels at multi-generational lows, a robust case can be made for hedging the threat of higher interest rates in the future now -before interest rates return to 'normal' levels. This IFM short course provides the foundation to understand how the cash and futures markets are connected, and how to guard against interest rate volatility.

The 36th Annual International Futures Industry Conference
When: March 15-18, 2011
Who: FIA
Where: Boca Raton Resort & Club
Full info: http://campaign.r20.constantcontact.com/render?llr=fwgtyucab&v=001WeBrwlP3VB1EJrvzuxUwxDg8fsg1Z8ZYjylTYIAfiEPOHumaM4PToYW-FxqnOsfyAaSlhRYAWrgj0P8-SYrVuEM53baCN9cyh3I5I-IOKZ3QwiUb2qUbyhwPmrOiHmw_Gt-oUr577qg%3D
Details: As one of FIA's premier events, the 36th Annual International Futures Industry Conference is host to an influential audience of 800 senior-level futures industry professionals, brokerage executives, technology and operations officers, exchange officials, money managers, and public policy leaders. Delegates from more than 30 countries attend this annual event.

SIFMA 2nd Annual Private Client Conference
When: Apr. 7 and 8, 2011
Who: SIFMA
Where: New York City
Full info: http://www.sifma.org/events/event.aspx?id=22289
Details: On April 7 and 8, the SIFMA 2nd Annual Private Client Conference, "Client First: Delivering the Vision," will build on the success of the inaugural Private Client Conference during the spring. This two-day event combines the strengths of SIFMA's former Sales & Marketing, Small Firms and Independent Firms conferences, producing North America's premier conference for private client groups at all levels. This conference is designed for senior managers in private client groups at global, regional, independent contractor and small broker-dealers, including national sales managers, regional directors, branch managers, wealth-management specialists, marketing specialists, and individual financial advisers and investment consultants.


Economic News

Fixed mortgage rates slip in latest week
By Michelle Donley, MarketWatch
Freddie Mac said Thursday that the 30-year fixed-rate mortgage average declined to 4.77% with an average 0.8 point for the week ending Jan. 6. Last week, the average was 4.86%, and the year-ago average was 5.09%. The 15-year fixed-rate mortgage averaged 4.13% with an average 0.8 point, down from last week's 4.2% and the year-ago 4.5%. "Mortgage rates began the new year a little lower this week and remained below those at the start of 2010, which should help aid the recovery in the housing market," said Frank Nothaft, vice president and chief economist at Freddie Mac.
http://jlne.ws/f5uObo

U.S. Companies Added 297,000 Jobs in December, ADP Says
By Timothy R. Homan, Bloomberg
Companies in the U.S. boosted payrolls in December by the most since records began in 2001, showing a stronger labor-market recovery at the end of last year, data from a private report showed today.
http://jlne.ws/gkNVai

Sales at U.S. Retailers Increased 3.6% Last Week
By Leslie Patton, Bloomberg
Sales at U.S. retailers rose 3.6 percent last week from a year earlier, as some shoppers returned to stores to take advantage of post-Christmas discounts, dodging a snowstorm that assailed the East Coast.
http://jlne.ws/eNs6P3

U.S. factory orders rebound
Reuters
New orders received by U.S. factories unexpectedly rose in November, and orders excluding transportation recorded their largest gain in eight months, providing more signs the economic recovery was on sustainable path.
http://jlne.ws/gddah5

ISM Index at 57.0 in December vs. 56.6 in November
By Gary Siegel, The Bond Buyer
The overall economy grew for the twentieth straight time, while the manufacturing sector expanded for the seventeenth time, the Institute for Supply Management reported this morning.
http://jlne.ws/e0Gd6Q

Manufacturing activity expands for 17th month in a row
By Blake Ellis, CNNMoney.com
Manufacturing activity expanded for a 17th month in a row in December, rising to the highest level in seven months, a purchasing managers' group said Monday.
http://jlne.ws/eXslBK

U.S. consumer bankruptcies rose 9% in 2010
The Globe And Mail/ Reuters
The number of U.S. consumers who filed for bankruptcy protection rose 9 percent in 2010, and the number could increase in 2011 because of high debt loads and stagnant income growth, a report issued Monday shows.
http://jlne.ws/i2Qwzz

World-Wide Factory Activity, by Country
By Phil Izzo, WSJ.com
Global manufacturing ended the year on a strong note, according a global purchasing managers’ index released by J.P. Morgan Chase and Markit. The JPMorgan global PMI hit a six-month high of 55 in December from 53.9 the prior month. Any reading above 50 indicates expansion. The expansion was broad based led by the U.S. and the euro zone. China also continued to expand, though at a slightly slower rate. Only Japan and Greece were in contractionary territory.
http://jlne.ws/fa7F56

Business Activity in U.S. Grows at Fastest Pace in Two Decades
Bob Willis, Bloomberg
Businesses in the U.S. expanded in December at the fastest pace in two decades, adding to evidence the world’s largest economy is accelerating heading into 2011.
http://jlne.ws/e7kalc

Pending Sales of U.S. Existing Homes Rose 3.5% in November
By Bob Willis, Bloomberg
The number of contracts to buy previously owned homes rose more than forecast in November, a sign sales are recovering following a post-tax credit plunge.
http://jlne.ws/gFfKo0

US mortgage foreclosures rise sharply
By Suzanne Kapner, Financial Times
US mortgage foreclosures jumped in the third quarter as fewer borrowers qualified for loan modifications that would have reduced their monthly payments, bank regulators have said.
http://jlne.ws/eg2yUX

Coincident indexes for 11 states expected to grow 4.5 % over next 6 months
The Federal Reserve Bank of Philadelphia produces leading indexes for each of the 50 states. The indexes are calculated monthly and are usually released a week after the release of the coincident indexes. The Bank issues a release each month describing the current and future economic situation of the 50 states with special coverage of the Third District: Pennsylvania, New Jersey, and Delaware.
http://jlne.ws/eiV8ug


Exchanges, Clearing Houses & MTFs

ELX Futures - ELX Announces 2010 Year-End Results; ADV in U.S. Treasury Futures Up 14% Year-Over-Year; ADV in Euro
ELX Futures, L.P. (ELX), a leading electronic futures exchange offering market competition in U.S. Treasury and Eurodollar futures contracts, announced today its 2010 year-end results. Total volume exceeded 13MM contracts for the year, with ADV surpassing 47K contracts in U.S. Treasury futures, an increase of 14% from 2009. ELX’s Eurodollar futures contract, which was launched in June 2010, established several record-breaking milestones. By December, ADV reached over 18K contracts traded with an open interest (OI) exceeding 200K contracts. From the third quarter of 2010 (the contract’s first full quarter) to the fourth quarter of 2010, ADV grew by 390%, average OI by 771%, and market share by 298%.
http://jlne.ws/gVsmZK

CME Group Volume Averaged 12.2 Million Contracts per Day in 2010, up 19 Percent; Double-Digit ADV Growth for Fourth Quarter and December
Press Release
CME Group, the world's leading and most diverse derivatives marketplace, today announced that 2010 volume averaged 12.2 million contracts per day, up 19 percent from 2009.
In December, CME Group interest rate volume averaged 5.0 million contracts per day, up 29 percent compared with the prior December. Treasury futures volume averaged 1.9 million contracts per day, up 37 percent compared with the same period in 2009, and Treasury options volume averaged 275,000 contracts per day, up 16 percent. Eurodollar futures volume averaged 2.2 million contracts per day, up 30 percent versus December 2009, and Eurodollar options volume averaged 649,000 contracts per day, up 20 percent.
http://jlne.ws/fuqRU2

Total trading volume at Eurex Group at 2.64 billion contracts in 2010
Press Release
The international derivatives markets of Eurex Group ended 2010 with a turnover of approximately 2.64 billion contracts, compared with 2.65 billion in 2009. The total volume for 2010 splits into 1.9 billion contracts traded at Eurex (2009: 1.7 billion) and 745.2 million contracts traded at the International Securities Exchange (ISE) (2009: 960.2 million). This corresponds to a daily average trading volume of 10.4 million contracts compared with 10.5 million in 2009.
A total of 39.6 million contracts were traded in the interest rate derivatives segment in December 2010, compared with 39.2 million in the same period last year.
http://jlne.ws/etXyKb


Firms & Banks

At Banks, New Fees Replacing Old Levies
By ROBIN SIDEL - WSJ
Banks, in an attempt to wring more revenue out of customer accounts, are conjuring up new ways to raise fees on basic products like debit cards, cash machines and checking accounts. As regulation curtailing financial institutions from levying certain charges on consumers has mounted over the past year, banks have had to dream up new fees to replace those now trimmed by laws. Credit-card users have experienced new inactivity fees and foreign-exchange charges, while checking accounts have gotten hit with new monthly maintenance fees.
http://jlne.ws/hNGXa4

Morgan Stanley Names Rosenthal as Chief Operating Officer, Replacing Nides
Bloomberg
Morgan Stanley , the sixth-largest U.S. bank by assets, named Jim Rosenthal chief operating officer to succeed Thomas Nides, who left the firm to take a position in the U.S. State Department.
http://jlne.ws/h97nRi

**CN: Rosenthal has been overseeing the company’s integration of its brokerage joint venture with Citigroup Inc.’s Smith Barney unit.


Deutsche Bank No. 2 underwriter of corporate bonds
San Francisco Chronicle
Number of the day $176 billion That's the amount of new corporate bonds underwritten by Deutsche Bank last year. The German bank moved up three places to No. 2 in global bond rankings for 2010, trailing only JPMorgan...
http://jlne.ws/fid0tF

Citi's service guru Tweets more bank customers
Reuters
Citigroup Inc is hoping that one of the country's most famous customer service gurus can help it rebuild its reputation -- one Tweet at a time.
http://jlne.ws/gqAcHD

Eurozone inflation soars to new high
By Gerrit Wiesmann, CNN
Eurozone inflation rose in June to its highest since the bloc's 1999 formation, data showed on Monday as political opposition mounted to an expected European Central Bank move to raise its main interest rate this week.
http://jlne.ws/dSG1wW

Goldman Sachs Investment in Facebook May Draw SEC Scrutiny
BusinessWeek
Goldman Sachs Group Inc.'s plan to offer clients up to $1.5 billion in Facebook Inc. equity may invite U.S. regulators to take a closer look at whether the owner of the world's most popular social-networking site is circumventing disclosure rules, securities lawyers said.
http://jlne.ws/i5mOBV

Citi Closes Student-Loan Deals
TheStreet.com
Citigroup said Monday that its Citi Holdings division of noncore assets now represents less than 20% of its balance sheet, after having closed the sale of $31 billion worth of student-loan assets. In two transactions, the New York-based banking giant sold $27 billion worth of loans to SLM Corp. , the holding company of Sallie Mae, and another $4.2 billion worth of assets ...
http://jlne.ws/g5li5M

Is Bob McCann's Spread In The Continental In-flight Magazine Offensive Or Just Embarrassing?
Business Insider
It's like Bob McCann is actively trying to piss off the higher-ups at UBS.
http://jlne.ws/i2hgw7

Bank of America pays Fannie Mae and Freddie Mac $2.6bn
BBC News
Bank of America has agreed to pay US mortgage giants Fannie Mae and Freddie Mac about $2.6bn (£1.7bn) to settle claims it sold them bad home loans.
http://jlne.ws/f9qaFC

Goldman Sachs returned to M And A; A top spot in 2010
Goldman Sachs (GS.N) was the top global mergers and acquisitions advisor last year, retaking the position from rival Morgan Stanley (MS.N), which derailed its multiyear grip on the ranking in 2009.
http://jlne.ws/ibe7Nx

Citi Employee Arrested in Indian Probe: Report
TheStreet.com
A Citigroup employee in India has been arrested on charges of forging documents to lure investors. Shivraj Puri, a relationship manager at the Gurgaon branch, alledgedly forged company statements and created multiple bank accounts to swindle funds that could total about $66.8 million, according to a report by The Wall Street Journal. The money involved was alledgedly taken ...
http://jlne.ws/f9482y

PIMCO Settles Suit, Promotes Emerging-Markets Bond Skipper
Morningstar
Plus, equities and fixed income now under single CIO at DWS, and more.
http://jlne.ws/hwo4Vb

Pimco to Pay $92 Million to Settle Market Manipulation Lawsuit
By Sree Vidya Bhaktavatsalam, Bloomberg
Pacific Investment Management Co., manager of the world’s biggest bond fund, agreed to pay $92 million to settle a private class-action lawsuit that accused it of manipulating the price of Treasury futures contracts.
http://jlne.ws/ew7eXd

PIMCO's El-Erian, managing the “new normal” investment landscape
Daniel P. Collins, Futures Mag.com
Mohamed El-Erian, CEO and co-chief investment officer of PIMCO, is one of the most knowledgeable people you can find on global financial issues. Prior to joining Bill Gross as co-CIO at PIMCO, El-Erian managed the Harvard University endowment fund, was a managing director at Salomon Smith Barney/Citigroup and spent 15 years at the International Monetary Fund.
http://jlne.ws/hKSAQJ

Bank Of America to Buy Back Bad Loans from Fannie, Freddie
By TESS STYNES - WSJ
Bank of America Corp. expects to take a provision of about $3 billion in the fourth quarter to buy back bad loans from Freddie Mac and Fannie Mae that were issued by its troubled Countrywide Financial unit.
http://jlne.ws/gfbMXI

Time to stop seeing bankers as bogey men
AFP Telegraph Finance News via Yahoo! UK & Ireland Finance
In 2008, the world changed for good. Names once held dear disappeared. Whole institutions imploded, almost overnight. Governments intervened. And taxpayers moaned as the full scale of the banking crisis ...
http://jlne.ws/i1HLDS

Deutsche Bank No. 2 underwriter of corporate bonds
San Francisco Chronicle
Number of the day $176 billion That's the amount of new corporate bonds underwritten by Deutsche Bank last year. The German bank moved up three places to No. 2 in global bond rankings for 2010, trailing only JPMorgan...
http://jlne.ws/hmGuCS

Deutsche Bank Challenges JPMorgan's Bond Dominance
BusinessWeek
Deutsche Bank AG climbed three places to No. 2 in the global corporate bond underwriter rankings this year, challenging JPMorgan Chase & Co.'s three- year reign as the top manager of debt offerings.
http://jlne.ws/fjaYYn

Bank of America Settlement with Lehman Not Yet Final
American Banking & Market News
Bank of America (NYSE: BAC) may be in for an expensive settlement, pending a final decision by a bankruptcy judge. The firm had received notice that a bankruptcy judge amended his order that they pay Lehman Brothers Holdings Inc. $590 million in compensation for taking its deposits, saying “the judgment is hereby deemed not to be a final judgment.”
http://jlne.ws/eCime9


Auctions & Statistics
Fed buys $1.5 bln in Tsys maturing 2028-2040 in today's open mkt operation of $9.36 bln
Press Release
The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system.
http://jlne.ws/dcRpcM

Treasury 4-Weeks Go At 0.120% High Yield
By Gary Siegel, The Bond Buyer
The Treasury Department Tuesday auctioned $25 billion of four-week bills at a 0.120% high yield, a price of 99.990667.
http://jlne.ws/gizIv6


Regulators

Fed’s Hoenig Defends Role of Dissenter
By Michael S. Derby, WSJ.com
The man who opposed every official action taken by the Federal Reserve last year continued to express his opposition to the current stance of monetary policy Wednesday, and said he believes the economy should continue to recover and add jobs in 2011.
http://jlne.ws/gT1GbY

EU mulls pushing wind-up costs on bank lenders-official
Reuters
The European Union's executive will propose rules this week that could force lenders to banks to share the costs of their winding up, a senior EU official said on Tuesday.
http://jlne.ws/gbM7cz

Fed's Dudley Scheduled Meetings With Wall Street, Global Chiefs
BusinessWeek
Federal Reserve Bank of New York President William Dudley scheduled meetings with top Goldman Sachs Group Inc. and Citigroup Inc. officials in his first days on the job, his daybook showed today.
http://jlne.ws/h8NqSg

ISDA Launches Initiative to Promote Portfolio Reconciliation and Reduce Risk in Asia Pacific Region
The International Swaps and Derivatives Association, Inc. (ISDA) today published the Asia Pacific Portfolio Reconciliation Memorandum of Understanding (MoU) to promote portfolio reconciliation and reduce risk in the Asia Pacific region. The objective of the MoU is to outline the process and frequency with which participating firms reconcile portfolios of collateralized derivatives transactions.
http://jlne.ws/dKTJ7V


OTC and Swaps

2011 to be a Defining Moment for Swap Execution Facilities
Finance Technology Network
Industry players are jockeying for position to compete as Swap Execution Facilities (SEFs). But regulators are still writing the rules.
http://jlne.ws/emY3Tt


Global News

UK banks to give month's notice on capital raising
By Huw Jones, Reuters
Banks in Britain will have to give their supervisor at least a month's notice if they want to raise fresh capital for inclusion in mandatory buffers, the country's financial watchdog said on Thursday. "Under the proposed change, a firm must tell us before it or another undertaking in its group issues any capital instrument which it wishes to include as regulatory capital," the Financial Services Authority (FSA) said in a consultation paper.
http://jlne.ws/fGFqIH

China PBOC: To Give Higher Priority To Curbing Inflation
WSJ.com
China's central bank will give a higher priority to curbing inflation in 2011, the People's Bank of China said Thursday, boosting expectations that it will adopt more tightening measures, such as raising interest rates.
http://jlne.ws/gZ34Le

Moody's Raises Philippines Outlook
BY ARRAN SCOTT AND RHEA SANDIQUE-CARLOS, WSJ.com
Moody's Investors Service raised its credit-rating outlook on the Philippines to positive from stable, bringing into view a possible upgrade for the Southeast Asian nation and highlighting improving economic conditions in the region.
http://jlne.ws/gL0bZ7

World Bank issues bond denominated in Chinese Yuan
BBC
The World Bank has issued its first bond denominated in the Chinese currency, joining a small but fast-growing market. The yuan-denominated bond is being issued to promote the use of the Chinese currency in international markets.
http://jlne.ws/fMmB4f

Eurobond launch intended to aid Ireland
By David Oakley, Financial Times
The European Union will today launch a multibillion-euro bond to raise money for the effort to rescue Ireland's finances, in this year's first important test of investor sentiment for Europe's troubled government debt markets. Bankers said there was strong demand for the bonds from European, Asian and Middle Eastern investors, even before the official opening of order books expected today.
http://jlne.ws/eB4hLC

UK Government Introduces Bank Levy
Press Release
The UK Government today introduced a permanent levy on banks' balance sheets as it believes that banks should make a full and fair contribution in respect of the potential risks they pose on the wider economy.
http://jlne.ws/cxgbC7

Euro rates to stay low even as banks borrow less
By Jessica Mortimer and Marc Jones, Reuters
Euro zone short-term interest rates looked set to remain low as the central bank's
limit-free lending continued to distort money markets, even as
banks scaled back borrowing after the year end.
http://jlne.ws/eBtrSD

Venezuela estimates economy shrank 1.9 percent in 2010
By Andrew Cawthorne, Reuters
Venezuela's economy shrank an estimated 1.9 percent in 2010, marking a second year of recession as the South American nation fails to match the recovery in other countries after the global financial crisis, the Central Bank said on Thursday.
http://jlne.ws/hH44ZL

Venezuela to Devalue Currency
BY KEJAL VYAS AND DAVID LUHNOW, WSJ.com
Venezuela will devalue its "strong bolívar" currency on New Year's Day, the government said Thursday, the second such devaluation within a year and at least the fifth major devaluation during the decade-long populist government of President Hugo Chávez. News of the devaluation came just after the central bank said the Venezuelan economy contracted 1.9% in 2010, the second consecutive year of declining output in the oil-rich nation after a 3.3% decline in 2009.
http://jlne.ws/gNyX80

China's CICC investment banking head quits
Reuters
The head of investment banking of China International Capital Corp (CICC), the country's top investment bank, is stepping down, local media reported on Friday.
http://jlne.ws/feTjym

Germany 'stronger' after economic crisis
BBC News
The German people have emerged stronger from Europe's economic crisis, Chancellor Angela Merkel has said in her annual new year's message. The country now enjoys its lowest unemployment rate since reunification 20 years ago despite the worst crisis in more than 60 years, she said.
http://jlne.ws/eI0KNp

IMF to discuss Polish credit line in mid-Jan
Reuters
The IMF's executive board has not yet approved an extension and increase of Poland's flexible credit line (FCL) facility but will consider the request in mid-January, Poland's deputy finance minister said on Thursday. The ministry said on December 23 that the International Monetary Fund had initially approved an increase in the credit line to $29 billion from $21 billion in a previous facility and its extension by two years.
http://jlne.ws/fMrgtO

Canadian Bonds Beat World With Their Biggest Gain Since '05: Canada Credit
Bloomberg
Returns in Canada's bond market exceeded the rest of the world in 2010, gaining the most in five years, and may outperform again this year amid record foreign purchases of the nation's fixed-income securities.
http://jlne.ws/hPNLwi

China Says Spain Debt Buys to Continue
BY Jonathan House, WSJ.com
MADRID-China supports Spain's economic reforms and will continue buying its government debt, Chinese Vice Premier Li Keqiang wrote in a newspaper editorial on the eve of a visit to Spain.
http://jlne.ws/fpwsWQ

Fee Squeeze Seen in 2011 by Top India Stock Arranger Citigroup
BusinessWeek
Fees for underwriting stock sales in India may remain near all-time lows as investment banks battle for market share, according to an executive at Citigroup Inc., the top-ranked adviser on equity offerings in the country.
http://jlne.ws/htbfmz

U.K. Think Tank Sees 20% Chance Of Euro’s Survival
By Javier E. David, WSJ.com
Europe’s common currency, battered for more than a year by a sovereign debt crisis, is unlikely to survive the next decade in its current form, the Center for Economics and Business Research warned Friday.
http://jlne.ws/i9Re3L

Greece in talks on extending debt repayment
Reuters
Greece is in talks with commercial banks on extending the repayment of its outstanding debt, in line with a similar plan to stretch out paying back its EU/IMF bailout, an Athens weekly reported on Friday.
http://jlne.ws/glsLeN

Most British financiers happy to stay in UK: survey
Reuters
The majority of people working in Britain's financial services industry are happy to stay in the UK, said a survey by the eFinancialCareers.com website, despite fears a clampdown on pay may force top performers overseas. The online poll of 415 workers in London's City finance district said only 14 percent were actively seeking a job overseas, with the rest happy to remain in the UK.
http://jlne.ws/fUxTAT

Argentina Reaches 80% Acceptance in 'Brady Bond' Swap
BY Shane Romig, WSJ.com
The holders of more than 80% of Argentina's defaulted Brady bonds have accepted a debt-swap offer in exchange for a basket of U.S. dollar-denominated bonds and a cash payment, Economy Minister Amado Boudou said in comments to local radio stations Thursday.
http://jlne.ws/fOjJZz

Italy's debt costs approach red zone
The Telegraph
Italy's borrowing costs have jumped to the highest level since the financial crisis over two years ago, raising concerns that Europe's biggest debtor may slip from the eurozone's stable core into the high-risk group on the periphery.
http://jlne.ws/gf7s34

Venezuela devalues currency again
The Globe And Mail/ Reuters
Venezuela said Thursday it was abolishing the lowest exchange rate of 2.6 bolivars to the U.S. dollar in a measure effectively devaluing the South American OPEC nation’s currency for a second time in 12 months.
http://jlne.ws/dOhNnw

Brazil's inflation seen easing-finance minister
Reuters
Brazil's Finance Minister Guido Mantega said on Thursday that inflation is giving signals of easing, and that lower economic activity in 2011 would help control prices next year.
http://jlne.ws/hT6d03

Economists: China won't hurt growth with excessive tightening
People’s Daily Online
China increased its benchmark interest rates last week for the second time in two months. While expecting similar moves to come in the near future, economists from major international investment banks do not seem to be worried about the impact of China's increasingly tight monetary policy on economic growth.
http://jlne.ws/dNnqdP