Forum Views ()
Forum Replies ()
Read more with google mobile :
Avoiding the financial abyss: Success, no glory
Yahoo!
My Yahoo!
Mail
Yahoo! Search
Search:
Sign InNew User? Sign Up
News Home -
Help
Navigation
Primary Navigation
Home
Singapore
Asia Pacific
World
Business
Entertainment
Sports
Technology
Top Stories
Most Popular
Secondary Navigation
Africa
Europe
Latin America
Middle East
North America
Search
Search:
Avoiding the financial abyss: Success, no glory
By JIM KUHNHENN,Associated Press Writer AP - Sunday, September 13
WASHINGTON - Halting the financial sector's death plunge is arguably the government's most measurable achievement this year. Yet as President Barack Obama observes the one-year anniversary of Lehman Brothers' collapse, his administration's increasingly sunny assessment of Wall Street's rebound faces a hard sell.
ADVERTISEMENT
The rescue effort, initiated by his predecessor, was expensive, and it bailed out the very institutions that the public blames for the crisis. Small banks are still failing, the institutions once considered too big to fail are putting on weight once again, and Obama's main pledge _ a more watchful eye on Wall Street _ hasn't taken hold in Congress.
What's more, it's hard to cheer for Wall Street when unemployment is rising, foreclosures have not abated and bankers lobby for bigger paychecks.
Obama on Monday plans a speech in New York assessing the condition of the financial markets. His treasury secretary, Timothy Geithner, previewed the administration's upbeat line this past week.
"The emerging confidence and stability of September 2009 is a far cry from the crippling fear and panic of September 2008," Geithner told a congressional watchdog panel Thursday.
Robert Shapiro, a former adviser to President Bill Clinton and now chairman of Sonecon, an economic advisory firm, said the administration gets "a very good grade for addressing the acute problem, but this is so far from over."
Economists and banking analysts largely agree that after the failure of Lehman Brothers a year ago, the financial system was on the edge of a precipice. Among the steps generally credited for stabilizing the system are the Federal Reserve's slashed interest rates and trillions in increased bank liquidity; the $700 billion Troubled Asset Relief Program that President George W. Bush initiated and Obama pursued; and tests that Obama's Treasury administered to determine whether the biggest banks had enough access to money to withstand a further economic downturn.
"The consensus is that we're off the brink. We were certainly on it," said Karen Shaw Petrou, managing partner of Federal Financial Analytics in Washington.
While the financial sector is no longer in a panic and many signs point to a recession that is on the mend, the public remains doubtful about their own financial status. A Pew Research Center poll last month found that slightly more than half of those surveyed said the condition of the economy was poor. Nearly two out of five said the economy was "only fair."
People questioned in August were more pessimistic about their own financial situation than those surveyed in June.
No wonder. Despite some easing of credit, bank lending remains tight. The Treasury Department, citing analysts' projections, said more than 6 million families could face foreclosure over the next three years. So far this year, 89 banks have failed, crippled by increasing loan defaults.
Bigger banks that received billions of dollars from the recovery program are beginning to pay back the money. They are on more solid footing and want to get out from under government restrictions. But even they are relying on extraordinary measures by the Fed and the Federal Deposit Insurance Corp.
"The fact that some of the biggest banks are not failing is a triumph of very low expectations," Petrou said.
While lawmakers and regulators warn about the hazards of having financial institutions that are too large and intertwined, some institutions have emerged from the financial crisis larger than before.
Aided and prodded by the government last year, JPMorgan Chase & Co.bought Bear Stearns, Bank of America Corp. was forced to buy Merrill Lynch & Co., and Wells Fargo & Co. acquired Wachovia. As of June 30, those three banks held $2.3 trillion in domestic deposits, or $3 out of every $10 in deposit in the United States. Three years ago those three institutions held about 20 percent of the industry total.
The danger is that large institutions that engage in high-risk ventures could require extraordinary government help to keep them from toppling the entire financial system. That's what the government had to do with American International Group Inc., the giant insurance company that received nearly $70 billion in bailout money.
To avoid that, Obama has recommended a series of regulatory changes, including new oversight powers for the Fed, increased capital requirements for institutions and other conditions designed to discourage companies from getting too big. But Congress has yet to act and some of Obama's proposals are meeting resistance within his own party.
White House spokesman Robert Gibbs said Saturday that in his New York speech, Obama will call for steps to help avoid a repeat of the financial crisis.
"The president is convinced that this is something the Congress can do this year and needs to be done this year," Gibbs said.
The public for now is far more focused on the debate over health care to pay attention to the need for restrictions on derivatives and other complex financial instruments. While high Wall Street salaries and bonuses have caused a sensation, a recent CBS poll shows the public split on whether the government should place restrictions on executive pay.
For Obama, the blend of success, lingering financial and economic troubles and mixed public sentiment presents a political conundrum. For now, he has time on his side _ at least until next year's congressional election campaigns begin in earnest.
"Ultimately the public judges presidents and congresses not on whether or not they like a particular policy, but on whether or not the policy has a result they like," Shapiro said.
"If it succeeds, the public will be fine, he will be fine, the Democrats will be fine. And if it doesn't, they're all in trouble."
Email Story
IM Story
Printable View
Blog This
Sign in to recommend this article »
0 users recommend
Related Articles: World
Afghan leader maintains lead in fraud-tainted pollAFP - Sunday, September 13
Honduran leader says U.S. voids visa because of coupReuters - Sunday, September 13
More than 50 civilians killed in Afghan attacksAFP - Sunday, September 13
Afghan attacks kill dozens as Karzai leads in pollReuters - Sunday, September 13
Iranian panel demands action against KarroubiAFP - Sunday, September 13
Most Popular – World
Viewed
Remains of Jesus-era synagogue found in Israel
Britain apologises to WWII code-breaker hero
Space shuttle Discovery lands safely in California
One shot enough against swine flu, US studies confirm
Giant statues reveal red hat secrets: study
View Complete List »
Search:
Home
Singapore
Asia Pacific
World
Business
Entertainment
Sports
Technology
Top Stories
Most Popular
Copyright © 2009 Yahoo! Southeast Asia Pte Ltd. (Co. Reg. No. 199700735D). All Rights Reserved.
Privacy Policy
- Terms of Service
- Community
- Intellectual Property Rights Policy
- Help
Other News on Sunday, 13 September 2009 Afghan leader maintains lead in fraud-tainted poll
EU discusses progress, problems during rare Mugabe talks
Iran inquiry rejects accusations of detainee rape
| International
|
Karroubi keeps up heat as Iran panel says he harms regime
Analysis: Iraq's spat with Syria backfiring on PM
Nine killed, 38 wounded in Iraq attacks
Iraq cabinet approves draft elections law
Libyan Lockerbie bomber's health worsens
Iran FM says nuclear talks with West are possible
Iran signals no compromise on nuclear issue
OJ still hopeful about appeal despite bail setback
Four dead in Indian Kashmir car-bomb blast: police
Avoiding the financial abyss: Success, no glory
2 US troops among 50 killed in Afghan violence
State seeks execution for 2 in Ore. bank bombing
States pushing back against health care overhaul
Pakistan kills 22 militants in Khyber
Lava maps causing angst in Puna area of Big Island
Garrido's twisted path led often to God
N.Korea scouted border before dam discharge: report
Thousands march to US Capitol to protest spending
'No winners' yet as Afghans to release prelim vote
Teen accused of threatening teacher to get 'A++'
Suspect falls asleep, hostages escape Kan. home
First convictions after syringe attacks in Xinjiang
Honduran leader says U.S. voids visa because of coup
Turkmenistan says it can supply EU-backed gas pipe
Delta 'may invest up to $550 mln' in JAL
China slams US tyre tariffs, threatens retaliation
Elton John says wants to adopt Ukrainian baby
| Entertainment
|
Israeli war film Lebanon wins top prize in Venice
| Entertainment
|
Woody Harrelson puts new spin on movie superhero
| Entertainment
|
Clooney, Reitman soar with 'Up in the Air'
| Entertainment
|
Woody Harrelson puts new spin on movie superhero
France's first couple inspires play in Spain
Century-old US Paris bookstore closes shop
Elton John says wants to adopt Ukrainian baby
Countdown to coveted award at Venice film festival
Stallone, Willis, Schwarzenegger form "dream team"
Venice film festival race seen wide open
Peres discharged from hospital after collapse
More Britons travel to Somalia for 'jihad': report
Vietnam says bloggers' case 'distorted'
Afghan attacks kill dozens; Karzai leads in poll
| International
|
Magna wants to cut 10,500 jobs, 4,500 in Germany: report
Peres discharged from hospital after collapse
| International
|
Vote fraud hard to pin down in Afghanistan
Balkan hopefuls trip over past on way to EU
US govt extends Afghanistan prison rights: report
'Lebanon' by Israeli Samuel Maoz wins Golden Lion in Venice
Strong earthquake rocks Venezuela
| International
|
US envoy arrives in Israel for talks
Israeli president faints in Tel Aviv
Back-to-back bombs at Shiite shrine in Iraq kill 4
Iran judiciary rejects opposition rape allegations
Karroubi keeps up heat as Iran panel says he harms regime
Fire at Kazakhstan health clinic kills 38
| International
|
U.S. to focus on nuclear issue in Iran talks
Libyan Lockerbie bomber's health worsens: brother
| International
|
Myanmar police release veteran opposition leader
| International
|
Cambodia KRouge court leaves victims disappointed
Chen case testing Taiwan's democracy: analysts
US Mideast envoy to make final push ahead of UN meet
Australia intercepts boat carrying 65 asylum seekers
More suspected asylum-seekers picked up near Australia
5 US troops among 50 killed in Afghan violence
Obama warns against scare tactics over healthcare
Five-star Aussie Lee overpowers England
China slams US tire tariffs, threatens retaliation
Myanmar briefly detains Suu Kyi aide: friend
Calif. financier under investigation dies
US military deaths in Afghanistan region at 746
Myanmar police question senior opposition figure
Thousands rally against Obama government
Items seized in Yale grad student's disappearance
Afghan commandos' esprit de corps transcends tribe
Hebrew Union College past president dies at 79
Mich. shooting suspect cuts arm while in jail
Actors lament struggles to clinch US distribution deals
AP Source: American Airlines talking with JAL
More women behind the camera at Toronto film festival
Dutch u-turn on soft drugs tolerance
US-ENTERTAINMENT Summary
Tina Fey wins Emmy award for Sarah Palin spoof
Beaches pose super-bug risk: study
NY Fashion Week designers ask: Who wants a hug?
Detroit, St. Louis jobless find work in films
Latvian enthusiasts unveil replica 1910 plane
Actors lament struggles to clinch US distribution deals
Tina Fey wins Emmy award for Sarah Palin spoof
| Entertainment
|
Film festival no place for Mideast politics: Jason Reitman
Israeli war film Lebanon wins top prize in Venice
| Entertainment
|
U.S. envoy says hopes to finalise settlement deal
Saudis lose out to Russia in oil cuts
SKorea to train 3,000 'cyber sheriffs': report
U.S. envoy says hopes to finalize settlement deal
| International
|
Nestle warns of possible exit from Switzerland
Dozens complain of abuse at Iran jail
US Mideast envoy Mitchell arrives in Israel
Merkel to face off with SPD rival in election TV clash
| International
|
Saudi foreign minister undergoes surgery in U.S.
Iran again rules out talks on its nuclear rights
| International
|
Netanyahu and Mubarak meet on reviving peace talks
Shoe-throwing Iraqi reporter set to be released
| International
|
Berlusconi ally dangles threat of early elections
| International
|
Policeman's sleeping family killed in north Iraq
| International
|
Dozens complain of abuse at Iran jail: report
| International
|
Obama moves to seize momentum in health debate
3 Hong Kong workers die in skyscraper fall
Report: Propaganda launched for NKorean succession
The Nation's weather
Australia intercepts boatload of asylum seekers
Indian Kashmir offers reward for car bomb leads
AFL-CIO president bids farewell as labor leader
Ex-Blagojevich adviser dies before prison term
Police break up Maoist protest, detain 35 in Nepal
Afghan detainees allowed to question detention
Nobel Prize winner Norman Borlaug dies at 95
China jails gangsters for riot over teen's death
Seoul mum on reported plans for 3rd NKorea nuke test
Malaysian Indian party's leadership vote
Voters mixed on election winning party: poll
JAL mulls raising $2.8 bln
Coca-Cola says Chinese ex-employee in police probe
India's Jet Airways: strike ends, service resumes
India's Jet Airways pilots end strike after 5 days
Chinese firms rushing to list in buoyant market
Lehman pain was Asian banks' gain
Report: Troubled JAL mulls raising $2.8 billion
Organic food hits Eastern Europe
Cody exorcises demons from Jennifer's Body
| Entertainment
|
Vienna museum fears restitution of stolen Vermeer
Fear in Taiwan as trade pact with China looms
Cream of the tribal arts world gather in Paris
Fey an Emmy winner for Palin mimicry? You betcha
Greece at new risk of being pushed off euro
Bodies of missing Tenn. mom, Jo Ann Bain, and daughter found
Female Breasts Are Bigger Than Ever
AMD Trinity Accelerated Processing Units Now in Volume Production
The Avengers (2012 film), made the second biggest opening- and single-day gross of all-time
AMD to Start Production of piledriver
Ivy Bridge Quad-Core, Four-Thread Desktop CPUs
Islamists Protest Lady Gaga's Concert in Indonesia
Japan Successfully Broadcasts an 8K Signal Over the Air
ECB boosts loans to 1 trillion Euro to stop credit crunch
Egypt : Mohammed Morsi won with 52 percent
What do you call 100,000 Frenchmen with their hands up
AMD Launches AMD Embedded R-Series APU Platform
Fed Should not Ignore Emerging Market Crisis
Fed casts shadow over India, emerging markets
Why are Chinese tourists so rude? A few insights