Banks Need More Capital
Bloomberg: "The Federal Reserve plans to deliver results of stress tests on U.S. banks to executives today that may show about 10 companies need additional capital to weather a deeper recession, people familiar with the matter said. Banks are formulating plans for filling their capital requirements, much of which would likely come from conversions of preferred shares, the people said. Many of the 19 lenders under review and the government are set to discuss publicly the examinations after markets close May 7, the people said."
More Bloomberg, on plans for no additional government funds: "'The administration doesn’t believe we need to go to Congress right now' to seek more money to rescue banks, White House press secretary Robert Gibbs said at his daily briefing ... 'Rather than financial or economic fixes, it looks like the Treasury really doesn’t have enough money to address the situation, and therefore is going back to this idea that somehow if we change preferred into common, magically the problem goes away,' said Joseph Mason, a banking professor at Louisiana State University in Baton Rouge who previously worked at the Treasury’s Office of the Comptroller of the Currency."
WSJ raises a cautionary note: "It's possible Wall Street is being overly optimistic about the impact of the results and the resulting dash by banks to bolster capital. One big risk worrying industry officials is that the market will view banks on the list as insolvent when the official results are announced Thursday, even though Fed officials have repeatedly said that's not the case."
FT analyzes Fed report on state of lending: "Banks tightened lending standards further in the three months to April, adding to the credit squeeze on households and businesses, the Federal Reserve’s senior loan officers survey said on Monday. However, the proportion of banks setting tougher standards in a number of loan categories fell relative to January, suggesting the tightening process could be abating ... the survey suggests that the main cause of low or declining loan volume going forward may be weak demand for credit rather than problems supplying it. However, some analysts think the banks responding to the survey may be shaping their answers to try to create this impression. These were the kind of figures 'you can read whichever way you are already leaning', said Alan Ruskin, a strategist at RBS Greenwich Capital."
HuffPost's Sam Stein reports House leaders reached agreement on Pecora Commission: "Aides on the Hill said that the House will likely vote on the measure Wednesday, adding that the chances of passage were high ... the body - eight or (likely) ten members, split evenly by party affiliation - would have the power of subpoena, compelling the key players to testify. 'It is,' said one staffer involved in the creating of this legislation, 'essential.'"
The American Prospect offers multi-part series on risk: "We offer five perspectives on rethinking risk -- on everything from finance to housing to social policy -- in the hopes of stopping the next major meltdown before it starts."
Tax Haven Crackdown
W. Post details the Obama tax haven crackdown: "[Obama] argues that the current system gives tax breaks to U.S. multinationals at the expense of companies that operate solely on American soil. In 2004, the most recent year for which statistics are available, U.S. multinationals paid an effective U.S. tax rate of just 2.3 percent on $700 billion in foreign profits, according to the administration ... To level the playing field, Obama would bar firms from taking deductions for expenses that support their overseas investments until they pay U.S. taxes on the profits. He would also crack down on firms that overstate their foreign tax bills. And he would reverse a Clinton-era rule known as 'check the box,' which permits firms to more easily transfer cash between countries. In practice, Obama officials said, 'check the box' has been used to shift income away from higher-tax countries and into tax havens such as Bermuda and the Cayman Islands, allowing firms to reduce their tax bills both at home and abroad."
The Hill notes Obama did not propose lowering the overall corporate tax rate: "House Ways and Means Committee Chairman Charles Rangel (D-N.Y.), who sponsored tax legislation in the last Congress overhauling the international tax code, offered support for Obama’s plan ... Rangel’s bill, however, also would have lowered the corporate tax rate, something Obama has not proposed."
Bloomberg has congressional react: "Senate Finance Committee Chairman Max Baucus, a Montana Democrat, called for 'further study' of Obama’s proposals within minutes of the president’s announcement yesterday. Representative Joseph Crowley, a Democrat on the tax-writing House Ways and Means Committee, said he’s wary because the tax changes would hurt Citigroup Inc., his New York district’s largest private-sector employer. Natalie Ravitz, a spokeswoman for Senator Barbara Boxer, a California Democrat, said that any tax overhaul should not lead to 'unintended consequences.' Other Democrats, including House Ways and Means Committee Chairman Charles Rangel of New York, support the proposal. Some lawmakers, including Iowa Senator Charles Grassley, the ranking Republican on the Senate finance panel, are still weighing the plan."
NYT focuses on one loophole not proposed to be closed: "The most widely used tactic not covered by the plan is known as transfer pricing, which multinational corporations employ routinely to reduce the taxes they owe to the United States by keeping their profits offshore in low-tax or no-tax havens."
OurFuture.org's David Sirota argues Panama trade deal boosts tax havens: "pretending to be for cracking down on tax havens while pushing a trade deal that rewards one of the biggest tax havens - and codifies that tax haven's laws into our international trade system - insults the public's intelligence."
Schumer Offers Alternate Version of Public Health Plan Option
NYT: Schumer proposes public plan with no public dollars: "The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government."
Politico notes Sen. Specter could oppose public plan option, but still allow simple majority vote: "In the end, if Democrats decline to use reconciliation, they may need Specter only to break a filibuster. The senator has been known to support ending filibusters to force an up-or-down vote on legislation and then vote against the bill on final passage."
HCAN's Jason Rosenbaum has advice for Sen. Grassley: "A Des Moines Register Poll is out with independent confirmation of Health Care for America Now's results - Americans support a public health insurance option, and that includes Americans in Iowa ... It would be nice if Grassley would listen to the facts, or his constituents."
Time cites anonymous grumbling that President needs to step up involvement: "Privately, some Democrats on Capitol Hill say they fear the negotiations currently under way are drifting. And some on the left are worried that Finance Committee chairman Max Baucus is being too solicitous of the Republicans. Meanwhile, time is running short. Both the House and Senate have set an extraordinarily ambitious timetable that would have the legislation passing each chamber by the time Congress adjourns for its August recess. Increasingly, the President's allies worry that they simply cannot get there that quickly without a much bigger investment of Obama's enormous political capital."
Columbia Journalism Review's Trudy Lieberman explores weaknesses in Massachusetts system, which lacks a public plan option.
Harkin Suggests Labor Law Reform Short of EFCA
Bloomberg: "The chief Democratic sponsor of a measure to promote union organizing says he may have to sacrifice its 'card-check' centerpiece in favor of more modest labor-law changes that could clear the U.S. Senate. Senator Tom Harkin said he is in talks with Senate Democrats opposed to the card-check approach to search for a compromise. There’s support to remedy 'imbalances' in labor law that favor businesses subject to union-organizing efforts, Harkin, an Iowa Democrat, said in an interview yesterday. 'Compromises are going to be made,' said Harkin, 69. “It probably won’t be card-check, because too many people are opposed to it now.”
AFL-CIO Blog: "Discussing Pennsylvania Sen. Arlen Specter’s switch last week from the Republican Party to the Democratic Party, [AFL-CIO's Richard] Trumka said the union movement would not support him in next year’s elections if he votes against the Employee Free Choice Act."
UAW chief speaks on Chrysler deal: "The president of the United Automobile Workers union, Ron Gettelfinger, said Monday evening that concessions granted to Chrysler would leave the U.A.W.’s new retiree health care fund 'on life support initially.' Separately, Chrysler won interim approval in federal bankruptcy court in Manhattan to access a $4.5 billion loan from the United States and Canadian governments. The ruling ... overruled objections by some Chrysler lenders and staved off ... certain and immediate liquidation. Mr. Gettelfinger ... said the equity that Chrysler was substituting for $5.1 billion in cash was worth 'zero today,' and added that the U.A.W. planned on selling its stock as soon as doing so was financially feasible. He dismissed criticism from some Chrysler lenders, who have accused the U.A.W. of getting preferential treatment from the Treasury Department as it mediated the union’s talks with Chrysler. 'We took a lot of risk here,' Mr. Gettelfinger said."
Obama Visits House Today on Climate
Greenwire previews: "An environmentalist tracking the climate debate expects Obama will do his best to persuade Democrats that he is behind them in midterm elections as they move forward on the legislation. 'Let them know they won't be hanging in the next election, 'the environmentalist said. 'Let them know it's a presidential priority. And if they help him, he'll help them out elsewhere, even if it's not on this bill.' Obama's timing could be ideal. While the 36-member subcommittee may seem like an early stage in the process for the president to be stepping in, Obama could get the biggest bang for his lobbying buck by pushing now. After all, the panel's political dynamics are seen as friendly to industry. 'There's no doubt that because of the way the ideology of the subcommittee is set up, passing the subcommittee would be a momentum-producing event,' [industry attorney Joe] Stanko said. It also appears Senate Democratic leaders see the House debate in the same way."
TNR's Brad Plumer on possible carbon cap-nuclear deal: "...nuclear power may be one way the White House tries to woo some of the more recalcitrant Dems ... sounds like liberal Dems would rather cave on nuclear than see the whole bill go down in defeat this time around."
Politico reports Chamber of Commerce divided on climate bill, betraying formal opposition position: "The U.S. Chamber of Commerce is taking heat from Johnson & Johnson, Nike and other corporate members over its opposition to global warming legislation pending in the House ... Lobbyists at business coalitions that support federal climate change legislation say other companies are discussing the possibility of sending their own letters to the Chamber — or of threatening to withhold dues from the Chamber in protest."
WSJ on "dueling ads" for and against, with the latest from Repower America.
Wonk Room's Brad Johnson: "Heritage Promotes ‘Completely Untrue’ Attack On Green Jobs"
Breakfast Sides
McClatchy asks: "Do Blue Dog Dems have clout to block Obama on spending?"
