It’s not every day that foxes openly campaign for more safeguards on the henhouse. Yet today it happened twice.
Let’s take a look starting with Citi’s Pandit Writes Obama in Support of Regulatory Overhaul
Citigroup Inc. Chief Executive Officer Vikram Pandit wrote President Barack Obama endorsing “strong regulatory reform” for U.S. banks, saying it would restore trust and confidence in the financial system.
“I have been a firm advocate of strong regulatory reform,” Pandit said in the letter to Obama obtained by Bloomberg News. “You can count on me and the entire Citi organization to support” overhaul efforts.
The letter was dated April 23, a day after Obama’s speech in New York in which the president challenged the financial industry to join the effort to revamp market regulations and said what happens on Wall Street has consequences throughout the nation.
“I believe banks should not speculate with their capital,” that “derivatives should be cleared and settled centrally” and that there needs to be “a strong federal consumer authority to protect consumer interests,” Pandit wrote.
OK Fair enough, prove it.
Mr. Pandit, let’s see some specific proposals. Are you in favor of Glass Steagall? Completely ending proprietary trading? Breaking up Citigroup? What specific recommendations do you have on derivatives?
Until you come out and say exactly what you support or don’t, color me skeptical.
Bernanke Says Budget Gap Might Raise Interest Rates
In yet another fox and chicken play, Bernanke Says Budget Gap Might Raise Interest Rates.
Federal Reserve Chairman Ben S. Bernanke said a failure to reduce the federal budget deficit may push up interest rates over time and impair economic growth, putting the recovery at risk.
“Achieving long-term fiscal sustainability will be difficult, but the costs of failing to do so could be very high,” Bernanke said in a speech today to a White House commission on the budget deficit. “Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth — and might even put the current economic recovery at risk.”
Budget deficits may eventually erode the confidence of bond investors in the management of U.S. fiscal policy, driving yields higher on Treasury borrowing, raising the cost of lending in the economy and slowing economic growth, Bernanke said.
The Obama administration estimates budget deficits will total $5.1 trillion over five years and hit a record $1.6 trillion in the year ending Sept. 30. The $1.4 trillion deficit in 2009 was equal to 9.9 percent of gross domestic product, the largest share since the end of the World War II.
OK Ben. Let’s see some actions not yapping. Hike rates, stop monetizing government debt regardless of what happens, unwind your bloated asset sheet, and sign off on an independent audit of the Fed.
Bernanke and Pandit sound like foxes arguing for locks on the front door of henhouse while simultaneously proposing no locks on the back door, the keys to the front door, and secret tunnels into the building just to be safe.
Mike “Mish” Shedlock
Click Here To Scroll Thru My Recent Post List