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Time to shore up financial regulations

21 Jun 2009 - Preaching the News for Sunday

This Sunday's psalm evokes images of distressed mariners crying out for rescue as they sink to the depths. President Barack Obama Wednesday unveiled a plan to bolster the U.S. financial regulatory system so that in the future the government will not be forced to choose between rescuing sinking institutions and financial collapse. Obama said his plan to refashion supervision of the U.S. financial system is needed to fix excessive risk-taking and lapses in oversight that helped push the economy into a prolonged recession. The president blamed the turmoil on a "culture of irresponsibility" that he said had taken root from Wall Street to Washington. The president will push Congress to grant new powers to the Federal Reserve to oversee the economy. The proposal sets out the biggest overhaul of market rules in more than seven decades, adding an additional layer of regulation for the biggest firms. A new Consumer Financial Protection Agency would oversee products from mortgages to credit cards. It would have authority to ban "unfair terms and practices," punish companies for violations with fines and penalties, and write rules to set higher standards for banks and non-bank companies. "We are called upon to recognize that the free market is the most powerful generative force for our prosperity--but it is not a free license to ignore the consequences of our actions," Obama said. But moving his plans through Congress as they are currently written is far from assured, given turf battles among lawmakers and what is sure to be heavy resistance from the financial sector. Obama acknowledged earlier this week that his revamp will be a "heavy lift." Source: Articles by Henry J. Pulizzi and Damian Paletta for the Wall Street Journal and Robert Schmidt and Hans Nichols for Bloomberg

barack obama financial system federal reserve regulation market
Can we bank on your support?

20 Dec 2009 - Preaching the News for Sunday

The infant in Elizabeth's womb "leaped for joy" when Mary approached, we hear in this Sunday's gospel. Small businesses that approach banks for loans are not getting a similar reaction. On Monday President Barack Obama told Wall Street bankers who were bailed out last year they have a moral obligation to make more loans. "One year ago--when many of these institutions were on the verge of collapse, a predicament largely of their own making, oftentimes because they failed to manage risk properly--we took difficult and, frankly, unpopular steps to pull them back from the brink," Obama said. Obama said that because taxpayers provided "extraordinary assistance" to save bankers from the financial crisis, "now that they're back on their feet, we expect an extraordinary commitment from them to rebuild our economy." Banks should not be required to make bad loans, the president said after meeting with executives of financial firms, but "I'm getting too many letters from small businesses who explain that they are credit worthy" but cannot get loans. In related news Federal Reserve Chairman Ben Bernanke was named Person of the Year by Time magazine this week. Time credited Bernanke with leadership that helped set the U.S. economy on a path to recovery, even if bank bailouts have proven unpopular. "Bernanke . . . knows the economy would be much, much worse if the Fed had not taken such extreme measures to stop the panic," Time said. Source: Articles by Henry J. Pulizzi for the Wall Street Journal, David Jackson for USA TODAY, Mark Felsenthal and Caren Bohan for Reuters, and the Associated Press

barack obama ben bernanke federal reserve small business banks loans bankers person of the year time magazine
Don’t make a federal case of unemployment

01 May 2011 - Preaching the News for Sunday

This Sunday’s reading from the Acts of the Apostles describes how members of the earliest Christian community joyously devoted themselves to communal life, holding their possessions in common and granting to each according to need. The economic environment in modern-day America is a good deal harsher for those in need, with stubbornly high unemployment and rising fuel and food prices. U.S. Federal Reserve Chairman Ben Bernanke didn’t offer much solace Wednesday at the first-ever press conference by someone in his position. The labor market is “improving gradually,” Bernanke said, but the Fed is reluctant to try to do more to stimulate job creation. “It is not clear that we can get substantial improvements in payrolls without some additional inflation risk. “In my view, if we are going to have success in creating a long-run sustainable recovery with lots of job growth, we have to keep inflation under control.” The central bank interprets rising gas prices to be a simple problem of supply and demand, Bernanke said. “There’s not much that the Federal Reserve can do . . . per se.” A longtime advocate of greater Fed transparency, Bernanke said the idea of holding a press conference was a natural as the bank looks for ways to provide more information to the public, despite the risk of being misinterpreted. “It was our judgment after thinking about this for some time that at this point the additional benefits from more information, more transparency, [and] meeting the press directly outweighed some of these risks,” he said. An article by Jennifer Epstein for Politico.com

ben bernanke federal reserve employment jobs inflation
Households barely hold their own

17 Jun 2012 - Preaching the News for Sunday

“The just one shall flourish like the palm tree,” promises the psalmist this Sunday, growing “like a cedar of Lebanon.” Hardworking U.S. families wish the economy would flourish and their household income would grow, but new data suggests otherwise. The recent economic downturn has erased nearly two decades of accumulated prosperity and has left the typical family with no more wealth in 2010.The U.S. Federal Reserve this week released a report that sheds light on the precarious financial state of the American family and may help explain why the economic recovery has been slow to take hold. The Fed’s Survey of Consumer Finances (SCF) for 2010 shows that the median value of income between 2007 and 2010 fell 7.7 percent, while median net worth plunged more than 38 percent.While the numbers are already 18 months old, the survey illuminates problems that continue to slow the pace of the economic recovery. The Fed found that middle-class families had sustained the largest percentage losses in both wealth and income during the crisis, limiting their ability and willingness to spend.“It fills in details to a picture that we already knew was quite ugly, and these details very much underscore that,” said Jared Bernstein, an economist at the Center on Budget and Policy Priorities. “It makes clear how devastating this has been for the middle class.” Sources: Articles by Mark Huffman for Consumer Affairs and Binyamin Appelbaum for the New York Times

federal reserve economic recovery economic downturn income net worth middle class jared bernstein
Taking stock of the market

18 Dec 2016 - Preaching the News for the Fourth Sunday of Advent, Cycle A

Signs and wonders “as high as the sky” are spoken of in this Sunday’s reading from the prophet Isaiah. Major U.S. stock indexes are also in sky-high territory this week as the Dow Jones Industrial Average closed above 19,900 for the first time Tuesday. The 20,000 mark seems to be close at hand, although the Federal Bank’s interest rate hike Wednesday slowed things down a bit, at least for a moment. The bigger question is, what does all the stock market hoopla mean for the U.S. economy and ordinary Americans trying to get by? The rise in interest rates is generally seen as a positive sign that the economy is healthy and may even need to be cooled off a bit to avoid overheating, which would lead to a high level of inflation. J.J. Kinahan, TD Ameritrade's chief strategist, said stocks have surged since the presidential election because, after the long campaign, investors now have a better idea which policies the country will adopt. “The biggest questions hanging over us are gone,” he said. As the Dow nears 20,000, people who are not invested in stocks are asking if they have missed out on a record run and how much farther stocks will rise. Those already invested are wondering if they should sell while they are ahead. The simple answer that many experts give to these sorts of questions is that most investors, especially ordinary Americans who may have some money set aside for retirement, should do little to nothing in light of 20,000 or any market milestone. “Don’t try to time the market and don’t get caught up in the hype over a round number. Invest for the long term, be patient, and let the power of compounding returns do the work,” says Todd Morgan, chairman of Bel Air Investment Advisors LLC. Some investors may want to take steps to protect themselves from today’s relatively high stock valuations. For example, recent research indicates that people within a few years of retiring should temporarily reduce their stock allocations to protect against potential losses in the years right after retirement, when retirees are most vulnerable to stock-market declines. The Federal Reserve, as expected, nudged up short-term interest rates by a quarter of a percent, signaling its confidence that the economy is sufficiently robust to handle it. In its announcement, the Fed predicted a gross domestic product growth of 2.1 percent for the next year, and GDP growth at a similar pace in later years, plus it indicated it would lift rates three times next year. The prognosis bodes well for ordinary Americans hoping for continued slow but steady improvement in the job market and in earnings. “We’re on a good path to reaching our objectives,” Fed Chair Janet Yellen said in a news conference, in which she was careful not to pick a fight with the incoming administration. In perhaps an oblique reference to President-elect Donald Trump’s complaint that the Fed should have elevated rates earlier, she noted that she thought the Fed “is not behind the curve.” In broad terms, she also defended the Dodd-Frank law imposing tighter federal controls on banks, saying it was “important” to ensure that lenders keep solid amounts of capital to cushion them in bad times. Trump has talked about scaling back Dodd-Frank. In its statement, the Fed said that the "labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year.” Lessons drawn from the readings Though economics often dominates the news, it’s good to remember, as the psalmist puts it this Sunday, that the "Lord’s are the earth and its fullness.” The beauty and grandeur of the natural world, and the miracle of life itself, does not depend upon the stock market or any “economic indicator.” They are, rather, “divine indicators” that serve to remind us where are ultimate loyalty—and security—can be found. Final thought in light of the news Before we break into a stanza of “Happy days are here again,” let’s pause to remember all those who have been left behind by the slow economic recovery of the past few years. Things may be better for more of us, but not for all of us. And when the “least among us” do not have the basic necessities—food, clothing, shelter, healthcare—then all of us are a little poorer.

stock market dow jones industrial average economy interest rates federal reserve dodd-frank