President Obama is of the view this Wednesday that:

“There’s still too little credit flowing to our small businesses”

The measures, announced by Mr. Obama at a small records storage company in Maryland, would allow smaller community banks to borrow at low rates from the Treasury Department’s Troubled Asset Relief Program. It would also raise the loan caps on several popular Small Business Administration programs. Under the administration plan, banks with less than $1 billion in assets could borrow from the program at a lower interest rate than financial institutions are required to pay.

In exchange, banks must demonstrate how they would increase lending to small businesses and follow up with quarterly reports. According to the White House, most business loans by the community banks that are eligible for the new rules are made to small businesses. In addition, community groups that lend to small businesses in low-income areas under a Treasury Department program will be able to borrow relief money at just 2 percent annually for eight years. The proposal as described Wednesday caps the infusions at $20 million.

Gene Sperling, senior counselor to Treasury Secretary Timothy F. Geithner, said in an interview that the small institutions would be subject to the same compensation rules as any other relief recipient but “for these smaller community banks, the executive bonus restrictions will usually affect only their single most highly compensated employee.” Read more…

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The programs the President will reveal include an increase in the maximum amount businesses can borrow through the Small Business Administration’s primary loan program, which currently stands at $2 million. In addition, the Treasury Department will expand access for smaller banks to the Troubled Asset Relief Program (TARP), a move aimed at spurring more local lending by community banks.

The TARP program was set up to recapitalize banks so that they would boost their lending to consumers and small businesses. In March, as the administration and the SBA took steps to stimulate small business lending, Treasury Secretary Tim Geithner ordered the top TARP recipients to begin sending the Treasury monthly reports on their small business lending activity.

As unemployment nears 10%, lawmakers are worried about the ripple effect of the credit crack down. Small businesses employ half of America’s non-government workers and traditionally create most of the country’s new jobs, according to government estimates. Read more…

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But now some of Wall Street’s biggest hedge funds are watching nervously as prosecutors say that Raj Rajaratnam, a billionaire fund manager, went too far in this relentless quest for a trading edge. On Friday, federal prosecutors charged Mr. Rajaratnam and five other people with insider trading — using information that they received illegally in an effort to make riskless profits on stocks. Prosecutors have said they are still investigating the case, and some defense lawyers who are not representing people already facing charges said Monday that they could not comment on the record because they may be retained soon.

Insider trading, however, can be difficult to prove, said Leslie R. Caldwell, the co-chief of the white-collar crime division at the law firm Morgan, Lewis & Bockius. The line between buying legitimate research, trading rumors and gossip, and illegally paying for market-moving information can be complicated. Read more…

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Federal Reserve Chairman Ben Bernanke said on Sunday at a Fed conference on Asia that the financial crisis has spotlighted the importance of dealing with global imbalances in trade and capital flows. In his brief introductory remarks, he was of the view that:

“The crisis has … highlighted the need for many policy reforms that range from improving financial regulation to addressing global imbalances”.

The US officials have sought to pressure China, which has a massive trade surplus with the United States, to allow the value of its Yuan currency to appreciate against the dollar and to foster greater domestic demand in its economy.

That campaign has become more muted during the crisis because of China’s importance as a holder of U.S. government and mortgage agency debt and as an engine of growth in the world economy. Bernanke did not mention China specifically in his speech. He said that:

“The global financial crisis and the recession of the past two plus years have challenged policy makers and economists and have made us keenly aware of the linkages between America, Europe, and Asia”.

San Francisco Fed President Janet Yellen, speaking to the same conference, did not comment on the outlook for monetary policy or the economy in brief remarks. Read more…

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This Tuesday the Senate Finance Committee passed its version of health care legislation without a public option. Only one Republican, Sen. Cynthia Snow of Maine, joined the committee’s 13 Democrats to pass the legislation in a 14-9 vote. Andre Koop, a biology junior, wasn’t supportive of the committee’s bill, but it didn’t include a public option.

“I’m against the public option because it would take away freedom from the doctors,” Koop said.

Health care reform now falls into the hands of Majority Leader Harry Reid, D-Nev., who will merge the Finance Committee’s bill with the Health, Education, Labor and Pension Committee’s proposal, which includes a public option. The bill would also establish a mandate for most legal residents to obtain health insurance and significantly expand eligibility for Medicaid. Read more…

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Watch the video “Senate Finance Cmte. Passes Health-Care Bill”

On Wednesday, an aide to Mr. Lieberman affirmed the senator’s opposition to the bill but indicated that Mr. Lieberman was still open to supporting health care legislation that might eventually reach the Senate floor.

“Senator Lieberman wants to know the actual impact of this bill on insurance premiums and on the economy,” the aide said, adding that Mr. Lieberman will also want the bill that reaches the floor to receive a “thorough” cost estimate from the Congressional Budget Office. Read more…

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Well, today may mark the first major achievement of the Obama administration – at least a key step in his attempt to repair the health care system. . The Senate Finance Committee, in America, voted in favor of legislation that could reshape the health care system.

Watch the video “Obama: Health Care Bill “Not Perfect”, Significant Work“

Interestingly, Senator Olympia Snowe became the first Republican in Congress to back a healthcare reform bill – she voted with the 13 Democrats in favor of the bill. 9 Republicans voted against it. Read more…

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The governor signed AB 260 by Assemblyman Ted Lieu (D-Torrance). The measure, which takes effect Jan. 1, tightens restrictions on mortgage brokers so they cannot steer borrowers to riskier, higher-interest loans when they qualify for less-expensive ones.

The new law also bans so-called negative-amortization loans, which offer the option of monthly payments so low that the loan amounts can actually grow over time. The law also limits prepayment penalties to no more than 2% of the loan balance and allows state regulators to enforce federal lending laws.

The governor banned similar legislation last year at the urging of some groups in the mortgage and real estate industries. Read more…

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The 30-year fixed-rate mortgage averaged 4.87% for the week ended Thursday, the lowest since May. It compares with last week’s 4.94% average and 5.94% a year ago.

Watch the video “Fed Boss Sees No Rush to Boost Rates”

Rates on 15-year fixed-rate mortgages were 4.33%, down from 4.36% last week and 5.63% a year earlier. The latest figure is the lowest since Freddie began tracking such loans in 1991.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.35%, down from last week’s 4.42% and 5.9% a year earlier. Those loans haven’t had such low average rates in the four years Freddie has kept such data. The average rate on one-year Treasury-indexed ARMs rose to 4.53% from 4.49%. The prior-year average was 5.15%. Read more…

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The euro strengthened versus the dollar after European Central Bank President Jean-Claude Trichet said yesterday, the region’s economy is emerging from a period of “free fall”. The rand posted the best performance against the greenback among 10 European, Middle Eastern and African currencies as investors sold dollar assets to earn higher yields.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish Krona, was at 75.903 at 6:05 a.m. in Tokyo, after falling yesterday as much as 1 percent to 75.767, the weakest level since August 2008.

The greenback extended its decline even as policy makers called over the past week for strength in the world’s main reserve currency. Read more…

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