President Barack Obama has moved to fill three vacancies on the board of the Federal Reserve, in an attempt to put his stamp on the US central bank.
Mr Obama is nominating Janet Yellen, president of the San Francisco Fed, to serve as vice-chairman, replacing Don Kohn, who will be stepping down in June. Mr Obama is also seeking to appoint Sarah Raskin, a banking regulator in Maryland, and Peter Diamond, an economist at the Massachusetts Institute of Technology, as Fed governors, completing the full slate of the seven-member board. The appointments have yet to be confirmed by the US Senate. Read more
Why are people selling Goldman today? I’m not a trader and I would caution against taking any big positions based on policy that still lacks details. But it seems to me at first glance that Goldman and Morgan Stanley could end up benefiting in some ways from the Obama crackdown on the banks.
Goldman and Morgan can simply give up their bank charters and go back to being non-bank financial firms. Yes, they would still be subject to tougher prudential standards under the administration’s wider reg reform plan. Yes, they would lose access to central bank loans. Read more
Did you spot the big hole in the Obama speech on job creation today? Nothing new on small business access to credit – possibly the single biggest obstacle to job creation in the US. This is a huge issue for the economy, the White House and the Fed.
With the Fed rightly withdrawing from sectoral intervention via financial markets now the financial system has normalised, supporting small business access to finance is properly a job for the government.
On paper this is not difficult. The government could provide guarantees to limit losses on small business loans or create a funding vehicle to coinvest in such loans alongside banks (I prefer this route as the taxpayer and the bank would have the same economic interests). Read more