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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According to a White House official, president Obama is planning to visit a small business in Maryland on Wednesday to present a series of initiatives aimed at increasing bank lending to small businesses.

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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The most precious commodity on Wall Street is information, and savvy players will do almost anything for it. Some investment funds canvass doctors to scout out blockbuster drugs. Others pay meteorologists to forecast weather that will affect the price of oil and wheat. And still others hire corporate executives to provide an inside view of companies and industries.

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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The dollar may extend its decline after trading at its lowest level in almost 14 months against the currencies of six major U.S. trading partners as signs of global economic recovery spur demand for riskier assets.

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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