It’s good to be a rating agency
Concerned about a U.S. debt default, Moody’s Investors Service placed the government’s Aaa credit rating under review for a downgrade. The credit rating agency cited a “rising possibility that the statutory debt limit will not be raised on a timely basis.” Treasury Secretary Timothy Geithner said the U.S. will default on its sovereign debt if the debt limit isn’t raised by Aug. 2.
More complication
The Committee on Payment and Settlement Systems and the technical committee of the International Organization of Securities Commissions proposed that central counterparties clearing foreign exchange options be able to guarantee the final settlement. The proposal surprised market participants, who said CCPs are not set up for such a requirement.
Internal division
Prominent Republicans in Congress are at odds with one another over raising the U.S. debt limit. Senate Minority Leader Mitch McConnell, R-Ky., warned that if Republicans are seen as driving the U.S. into default, they will guarantee President Barack Obama’s re-election.
More scrutiny
The Securities and Exchange Commission is examining banks’ estimates of possible liabilities related to mortgage issues, sources said. Bank of America said last month that it would take $20.6 billion in mortgage-related charges for the second quarter.
Like a disease
EU leaders have been trying for months to come up with a way to provide Greece with additional aid to resolve the country’s sovereign-debt crisis and keep it from spreading to other European nations, such as Spain and Italy. Sources said an emergency summit is in the works to tackle Greece’s debt problems. Meanwhile, the International Monetary Fund warned that Greece has little room for error as it implements austerity measures attached to a previous rescue.
More and more like it
Mary Miller, assistant U.S. Treasury secretary for financial markets, said the Dodd-Frank Act should survive its difficult first year and protect the economy in the future. “Scaling back or repealing major parts of the Dodd-Frank Act or not providing regulators with the funds they need to implement the act will leave our economy exposed to a cycle of collapses and crises,” Miller said.
QE @#%$@ 3
The Federal Reserve is ready to act if the U.S. economy weakens or the risk of deflation arises, Chairman Ben Bernanke told Congress. He said the central bank remains “prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.” Bernanke said the Fed will “keep all options on the table.”
Closer look at the computer trading
An official at the Australian Securities & Investments Commission said breaches of market-integrity rules by traders who use computer-driven strategies won’t be tolerated. Greg Yanco of ASIC said concerns have been raised about “problematic algorithms.” The regulator told market participants that they should take steps to prevent problems with high-frequency trading.
Scramble
The European Banking Authority is poised to reveal results of stress tests on 91 banks Friday. However, as regulators adjust the terms of the assessments, bankers and lawmakers are scrutinizing the process. Involved parties are concerned about the credibility of the tests and how they will be perceived by markets.
Should be more
The role of the International Monetary Fund should go beyond lending money to countries in financial trouble, according to The Economist. “Post-crisis it seems the Fund can play a role in spotting systemic risks that could bring down the global economy,” an Economist Free Exchange blogger writes. “Of course, even if their economists have that foresight, countries don’t have to heed the Fund’s warnings until it is too late.”
Gotta cut down on my rice intake
The price of rice surged to its highest level since 2008 because of concern that Thailand’s government price support will increase the cost of exports, as global demand grows. Indonesia, the world’s third-biggest rice consumer, announced a plan to import to bolster its stockpile.
Lowest
Fitch Ratings downgraded Greece’s credit rating from B+ to CCC, giving it the lowest rating of any country. Fitch said there is a real possibility that Greece will default on its government debt.
Bye bye Bskyb
Rupert Murdoch’s News Corp. dropped its takeover bid for British satellite broadcaster BSkyB. The company faces a government inquiry into voice mail hacking and bribery of police by News of the World and other News Corp. publications. The media giant said it expects to “deploy our capital elsewhere.”
Argentina is under the microscope
The executive board of the International Monetary Fund said it might publish a report on the quality of Argentina’s economic data, including its inflation figures. Argentina’s government has been accused of manipulating inflation data for years. The nation’s Congress has decided to use private inflation estimates, rather than the government’s reports.
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