June 4, 2010 Issue 21
Financial Regulatory Reform Bill
The House and Senate were out of session this week due to the Memorial Day District Work Period. Consequently, the debate on financial reform remained mostly quiet, although committee staffers began the process of working with the White House and the Treasury Department to reconcile the differences between the House and Senate bills. On Tuesday, House Financial Services Committee Chairman Barney Frank (D-MA) said he was confident that a bill will be on President Obama’s desk by the Fourth of July. He also said he would like to see as many as seven conference committee meetings – broadcast by C-Span, ideally – with amendments voted on individually in open sessions. The initial work of the committee is expected to start next week and last through the end of the month.
May Jobs Report Released
On Friday, the Department of Labor released the May jobs report showing the U.S. economy added 431,000 jobs in May. However, only 41,000 of those jobs were from the private sector, and the remaining 411,000 were a result of temporary government jobs in the U.S. Census Bureau. The unemployment rate fell from 9.9% to 9.7%. Taking into account revisions to prior months, the U.S. economy added an average of nearly 200,000 jobs per month in the January-May period. In May, employment in professional and business services rose by 22,000. Manufacturing continued to trend up, rising by 29,000. Construction, a sector of the economy that remains soft, lost 35,000 jobs in May.
G20 Meeting In South Korea
On Friday, the meeting of the G20 finance ministers and central bank governors began in South Korea’s southeastern port city of Busan. The meeting’s agenda focuses on global cooperation to improve financial and fiscal soundness. At the meeting’s outset, sources indicated the ministers would delay the implementation of tougher international banking regulations known as “Basel III,” which were due to be finalized by November. Disagreements over the regulations include the scale, scope, and timing of the increases in capital and liquidity banks will be required to hold, as well as the leverage they will be allowed. The U.S. and U.K. are pushing for tougher standards, but western and central European countries are opposing the stricter measures. Sources indicated that the U.K. and the U.S. are offering to delay the implementation of the Basel III reforms in a bid to ensure that the principles do not get watered down. Sources also indicated that France and Germany are seeking to reopen arguments thought to be settled last year in a bid to dilute capital requirements for their banks by allowing them to include deferred tax assets and minority interests in tier one capital. The Basel III rules were originally expected to be phased in by the end of 2012, but sources familiar with the discussions said that the new rules are now likely to be put in place between 2014 and 2016.
