April 3 (Bloomberg) -- President Barack Obama got a pair of wins on Capitol Hill as the House and Senate approved drafts of his 2010 budget plan that largely adhere to the administration’s priorities.
The U.S. House yesterday approved a $3.55 trillion plan that echoes his calls for revamping the nation’s health-care system, rewriting education policies and reining in global warming. The vote was 233-196 with every Republican who voted opposing the plan.
Hours later the Senate passed its draft, 55-43, with no Republicans voting in favor and two Democrats, Ben Nelson of Nebraska and Evan Bayh of Indiana, in opposition. Lawmakers will try to work out their differences later this month after returning from a two-week break that begins April 6, the Wall Street Journal reports. They have agreed to the President’s top priorities but lowered the budget submitted by Obama, who proposed boosting spending on basic domestic government by just over 10%.
The House version would raise such spending by 9.5% and the Senate by 7%. The $3.6 trillion budget calls for an increase in spending on health care, energy and education. Lawmakers, rejecting pleas by Senate Majority Leader Harry Reid, endorsed a non-binding amendment proposing to cut the estate tax beyond what the Obama administration proposed. The chamber voted 51-48 to increase the amount exempt from the tax to $5 million while reducing the levy to 35 percent.
The Obama administration would set the rate at 45 percent while exempting $3.5 million. “It’s so stunning, so outrageous that some would choose this hour of national crisis to push an amendment to slash the estate tax for the super-wealthy,” Reid, of Nevada, said just before the vote.
The Senate also urged the Federal Reserve to disclose more information about the aid it has provided to financial institutions. Another approved nonbinding amendment called for using remaining funds in the Treasury Department’s Troubled Asset Relief Program to aid small businesses.
Friday, April 3, 2009
G-20 Meeting Concludes - What Was Accomplished?
(Bloomberg April 3). The Group of 20 leaders who met Thursday in London announced numerous initiatives to boost the global economy while giving the International Monetary Fund additional responsibilities. The IMF, which received a commitment of more than $1 trillion from the leaders, will be charged with warning of impending issues and assessing how G-20 nations are doing on their regulatory and fiscal-stimulus vows. At the summit, leaders also tackled cracking down on tax havens and toughening financial regulations.
Thursday, April 2, 2009
CFA comments on FASB's easing of the fair-value rules
The changes approved today to fair-value, also known as mark-to-market, allow companies to use “significant” judgment in valuing assets to reduce writedowns on certain investments, including mortgage-backed securities. Accounting analysts say the measure, which can be applied to first-quarter results, may boost banks’ net income by 20 percent or more. FASB approved the changes during a meeting in Norwalk, Connecticut.
The easing of mark-to-market accounting rules by the Financial Accounting Standards Board helped spur markets Thursday. The board approved most of its proposals made a couple of weeks ago, despite criticism from some investor groups. Lawrence Smith, a member of the FASB, addressed concerns that the board had bowed to pressure from the banking industry and lawmakers. "We are an independent standard setter, and it's important that we maintain our independence," Smith said. But he added that the board cannot "ignore what's going on around us." Patrick Finnegan, director of the Financial Reporting Policy Group at the CFA Institute, shared his thoughts on the FASB's decision.
The easing of mark-to-market accounting rules by the Financial Accounting Standards Board helped spur markets Thursday. The board approved most of its proposals made a couple of weeks ago, despite criticism from some investor groups. Lawrence Smith, a member of the FASB, addressed concerns that the board had bowed to pressure from the banking industry and lawmakers. "We are an independent standard setter, and it's important that we maintain our independence," Smith said. But he added that the board cannot "ignore what's going on around us." Patrick Finnegan, director of the Financial Reporting Policy Group at the CFA Institute, shared his thoughts on the FASB's decision.
Bond Outlook - Treasuries Fall as G-20 Leaders Reach Agreement
(Bloomberg News, April 2) Tracking Fixed Income - Analysis and Discussion with Michael Pond of Barclays Capital. Bullish on Treasuries in the Short-Term, but Bearish in the Long-Term (>6 months).
Geithner’s Non-Recourse Gift That Keeps on Giving to Bill Gross
Treasury's troubled-asset plan might be boon for Pimco
Bloomberg (02 Apr.) The U.S. Treasury's plan to cleanse banks of their troubled assets might result in a windfall for Pimco and other institutional investors. They might see annual returns of 20% on troubled mortgages bought at substantial discounts because the plan allows investors to borrow six times their investment with "nonrecourse" government-backed debt, Credit Suisse analysts said. "This is perhaps the first win-win-win policy to be put on the table," said Bill Gross, co-chief investment officer of Pimco. For the complete story go to:
http://www.bloomberg.com/apps/news?pid=20601208&sid=aKm0M7RHXDoQ&refer=finance
Wednesday, April 1, 2009
Dan Fuss Sees Higher Treasury Yields, Likes Corporates (Bloomberg interview today)
April 1 (Bloomberg) -- Marquette University grad and fixed income icon, Dan Fuss, vice chairman of Loomis Sayles & Co., was interviewed on Bloomberg TV today by Julie Hyman. He sees higher Treasury yields and he likes corporate bonds.
A Recent Morningstar Interview with PIMCO's El-Erian on the Financial Crisis
Dr. El-Erian is a co-CEO and co-CIO of PIMCO, based in the Newport Beach office. He re-joined PIMCO in 2008 after serving for two years as president and CEO of Harvard Management Company, the entity that manages Harvard’s endowment and related accounts. Dr. El-Erian also served as a member of the faculty of Harvard Business School and as deputy treasurer of the University.
He first joined PIMCO in 1999, as managing director and was a senior member of PIMCO's portfolio management and investment strategy group. Before coming to PIMCO, Dr. El-Erian was a managing director at Salomon Smith Barney/Citigroup in London and before that, he spent 15 years at the International Monetary Fund in Washington, DC. Dr. El-Erian has published widely on international economic and finance topics and has served on several boards and committees, including the Emerging Markets Traders Association and the IMF’s Committee of Eminent Persons.
He is also a member of the U.S. Treasury Borrowing Advisory Committee and the IMF’s Capital Markets Consultative Group, and chairs Microsoft’s Investment Advisory Committee. He has 25 years of investment experience and holds a Ph.D. in economics from Oxford University. He received his undergraduate degree from Cambridge University.
He first joined PIMCO in 1999, as managing director and was a senior member of PIMCO's portfolio management and investment strategy group. Before coming to PIMCO, Dr. El-Erian was a managing director at Salomon Smith Barney/Citigroup in London and before that, he spent 15 years at the International Monetary Fund in Washington, DC. Dr. El-Erian has published widely on international economic and finance topics and has served on several boards and committees, including the Emerging Markets Traders Association and the IMF’s Committee of Eminent Persons.
He is also a member of the U.S. Treasury Borrowing Advisory Committee and the IMF’s Capital Markets Consultative Group, and chairs Microsoft’s Investment Advisory Committee. He has 25 years of investment experience and holds a Ph.D. in economics from Oxford University. He received his undergraduate degree from Cambridge University.
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