Top Interest Rate Headlines 01-19-11: Housing Remains Embattled Sector

Housing Remains Embattled Sector
By Kathleen Madigan, WSJ.com
Housing may no longer be in the basement, but it is barely crawling up the cellar steps. December saw housing starts slip a greater-than-expected 4.3% to an annual rate of 529,000. Over the past two years, starts have been averaging below a 600,000 pace–well below the mark of nearly 2 million hit regularly during the housing boom.
http://jlne.ws/gK7oBV

WSJ/NBC Poll: U.S. Losing Ground to China
By Patrick O'Connor, WSJ.com
Americans have something of an inferiority complex when it comes to China. More respondents to the latest Wall Street Journal/NBC News poll say China will be the world’s dominant power in 20 years while than think the U.S. will retain that mantle. But the 38% to 35% margin is close.
http://jlne.ws/h8IQKy

A Housing Rebound Won't Lift the Economy
By Kathleen M. Howley, Bloomberg Businessweek
The housing market may start crawling up from rock bottom this year. Even if it does, though, any rebound is likely to be anemic. "There's a good chance of a housing turnaround this year, but it's not going to be enough to give much help to the economy," says Karl Case, the co-creator of the S&P/Case-Shiller indexes that track U.S. home prices. "We're coming off 50-year lows, and we still have to deal with the foreclosure mess."
http://jlne.ws/gcbtQF

China agrees to $45B trade investment, policy changes
By Howard Schneider, The Washington Post
China has agreed to $45 billion in trade and investment contracts with U.S. companies and has made a series of other trade-related concessions as part of Chinese President Hu Jintao's visit, a senior administration official said Wednesday.
http://jlne.ws/gMELRH

Wells, U.S. Bancorp profits up, margins squeezed
By Joe Rauch, Reuters
Wells Fargo & Co (WFC.N) and U.S. Bancorp (USB.N) said low interest rates were squeezing lending profits, but improving credit quality helped both banks post higher fourth-quarter earnings.
http://jlne.ws/hPyCG5

Banks' Underlying Problem Is Revenue
By ERIC DASH - NY Times
The nation's banks are posting runaway profits for 2010, in a drastic reversal from 2009, when the prospect of widespread loan defaults forced them to set aside billions of dollars to cover losses. The banks now say they set aside more money than they needed, and so they are withdrawing large sums from loss reserves. A big chunk of the newfound earnings, nearly a third, comes from those withdrawals. So bank earnings since the peak of the financial crisis in 2008 have been exaggerated to a large degree, in both directions, by the shuffling of money into and out of reserves.
http://jlne.ws/hS00PE

Panel Begins to Set Rules to Govern Financial System
By NY Times
The new regulatory board charged with overseeing the stability of the financial system took its first big steps on Tuesday to set out tentative guidelines to limit trading by banks for their own accounts and to restrict the growth of the biggest financial companies, Edward Wyatt reports in The New York Times.
http://jlne.ws/f0HKjL

Deadlines Missed on Financial-Overhaul Rules
By JEAN EAGLESHAM And VICTORIA MCGRANE - WSJ
Regulators have missed or postponed several deadlines to write rules needed to implement the financial overhaul triggered by the Dodd- Frank law.
http://jlne.ws/edk749

Kroll to challenge big three rating agencies
By Brooke Masters in London - Financial Times
A new credit rating agency, backed by entrepreneur Jules Kroll, opens for business today with plans to challenge the dominance of its three big rivals. Kroll Bond Ratings will focus on rating complex products, including asset-backed securities, seeking to capitalise on widespread criticism of the credit rating agencies during the financial crisis. They gave AAA ratings to many complex securities that turned out to be far more risky than they appeared.
http://jlne.ws/ePpzh3

ECB flexes muscles in Brussels clearing reform
By Jeremy Grant and Philip Stafford - Financial Times
The European Central Bank has warned that it must have greater involvement in reform of how clearing houses operate and are overseen in Europe, in a sign it is starting to flex its muscles in the shaping of landmark over-the-counter (OTC) derivatives and clearing regulations.
http://jlne.ws/gcwqNx

US rule requires creditors and shareholders of big failing financial firms to accept losses
Canadian Business
WASHINGTON - Creditors and shareholders will now have to absorb some of the losses when the U.S. government steps in to dismantle large failing
http://jlne.ws/gPJhJr

European banks warned to curb bonuses
By Nikki Tait and Megan Murphy - Financial Times
Europe's top regulator has urged banks to "show moderation and responsibility" as they announce their annual bonus pools in coming weeks - and issued a thinly veiled threat of restrictions if they step out of line with current rules.
http://jlne.ws/ezpXz2

Citigroup to Name a New President
BY RANDALL SMITH - WSJ
NEW YORK-Citigroup Inc.'s chief executive officer, Vikram Pandit, plans to name John Havens as president and chief operating officer. The move is part of a structural overhaul meant to address the bank's efforts to expand as it tries to put the lingering effects of the financial crisis behind it.
http://jlne.ws/hH22e6

Goldman's Facebook retreat reflects new normal
The Edge
NEW YORK: Goldman Sachs Group Inc's decision to scale back a heavily publicized sale of shares in social network site Facebook shows how the bank risks losing its edge as financial regulation intensifies, according to Reuters on Tuesday, Jan 18.
http://jlne.ws/gZKIXE

Citigroup 46% Gain Masks Flawed Mortgages
BusinessWeek
Three years after bad home loans helped trigger the recession, the New York-based bank is still selling mortgages that violate quality standards, according to an internal Freddie Mac review
http://jlne.ws/gJg3Gj

Four banks to manage AIG share sale
AsiaOne
NEW YORK - AIG chose Bank of America, Deutsche Bank AG, Goldman Sachs Group Inc and JPMorgan Chase & Co to manage the sale of the government's 92 percent stake in the insurer, a person familiar with the situation said on Tuesday.
http://jlne.ws/ee2tOt

FSA hits Barclays with record L7.7m fine
By Brooke Masters and Sharlene Goff in London
Barclays will pay a record L7.7m fine and up to L59m in compensation for failing to provide adequate investment advice to more than 12,000 of its customers, many of whom were retirees who suffered losses in the financial crisis.
http://jlne.ws/gBOaiO

Myners denies giving bank auditors comfort
Reuters Finance News (EU) via Yahoo! UK & Ireland Finance
LONDON (Reuters) - Auditors were not given specific government reassurances so they could hand banks a clean bill of health at the height of the financial crisis, a former minister said on Tuesday. Paul ...
http://jlne.ws/f33h0h