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U.S. Banks Said to Seek Relief From Regulators as Deposits Swell - (www.bloomberg.com) U.S. regulators have asked some banks to take more deposits from large investors even if it’s unprofitable, and lenders in return are seeking relief on insurance premiums and leverage ratios, according to six people with knowledge of the talks. Deposits are flooding into the biggest U.S. banks as customers seek shelter from Europe’s debt crisis and falling stock prices. That forces lenders to raise capital for a growing balance sheet and saddles them with the higher deposit insurance payments. With short-term interest rates so low, it’s hard for financial firms to reinvest the new money profitably. Regulators have asked banks to take the deposits anyway, three people said, with one lender accepting $100 billion. The regulators want lenders to take the deposits because it improves the stability of the financial system, according to one of the people, who said U.S. banks are viewed as places of strength.
Doubts Still Harbored About Europe’s Banks - (www.nytimes.com) European banks have become nervous about each other’s creditworthiness, evoking memories of the mistrust that prevailed during the dark days of 2008. European institutions are better armored for a crisis than they were in 2008, analysts say. But some still have doubts whether that armor is thick enough to withstand another big shock. Despite progress in rehabilitating the financial system since then, analysts say, some gaps remain, among them the continued lack of any mechanism to deal with the failure of a large bank. And while regulators have pushed banks to reduce risk, bolster their reserves and become less dependent on fickle short-term financing, the measures were designed to be phased in over a decade. As a result, they still fall short of what some experts, particularly in the academic world, consider adequate.
Central bankers face uneasy mood ahead of Jackson Hole economic summit - (www.washingtonpost.com) During the past two months, the risk that the United States will slip back into recession has increased precipitously. Analysts are now facing the possibility that the nation actually lost jobs in August for the first time in more than 18 months (the Labor Department will release U.S. unemployment figures for August next week). Many on Wall Street are starting to think the Fed may need to look deep into its depleted quiver for new arrows to try to arrest the faltering outlook. Europe’s debt crisis has entered a more ominous phase, with the European Central Banking buying billions’ worth of Spanish and Italian bonds to try to avert a further panic and Germany and France showing weaknesses, as well. The stock market has returned to jaw-rattling levels of volatility. Even the booming Chinese economy may be slowing as it continues its anti-inflation campaign.
Bailout for Greece Falters Over Demand for Collateral - (online.wsj.com) Euro-zone policy makers on Thursday appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a €110 billion ($158.6 billion) bailout for Greece, raising concerns that the Mediterranean nation may default. Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week. Finland, meanwhile, shows no sign of backing down. Also Thursday, German Chancellor Angela Merkel unexpectedly canceled a trip to Russia in early September to shepherd through parliament a crucial change to the euro-zone bailout fund. The cancellation comes at a sensitive time for relations with Russia, and amid growing nervousness about dissent within the ranks of her own party over her handling of the euro-zone debt crisis.
Troubled Spain amends constitution to limit debt - (finance.yahoo.com) Spain's main political powers agreed to amend the constitution Friday to make the government legally obliged to keep its deficit low, an effort to reassure financial markets that it will keep its troubled finances under control and not need a bailout. The ruling Socialists and the opposition center-right Popular Party cut a deal after hours of frantic negotiations to propose a law under which, starting in 2020, the national deficit cannot surpass 0.4 percent of the country's GDP. That threshold can be surpassed only in cases of natural disaster, economic recession or other extraordinary circumstances that will have to be declared formally by a vote in Parliament. The constitutional amendment is expected to be voted on Sept. 2 in the lower house of Parliament, while the actual law is due to be passed by July 2012. Spain insists it is not acting under pressure from European authorities, even though French President Nicolas Sarkozy and German Chancellor Angela Merkel last week called for all eurozone nations to enact constitutional amendments requiring balanced budgets.
Bernanke Scholar Advises Bernanke Fed Chief - (www.bloomberg.com)
Fed’s Monetary Policy Stance May Fuel Inflation, India Central Bank Says - (www.bloomberg.com)
Bernanke seen stopping short of pledge for QE3 - (www.reuters.com)
Exclusive: China plans fresh move on bank liquidity - (www.reuters.com)
Bernanke Says Fed Still Has Stimulus Tools, Doesn’t Signal He’ll Use Them - (www.bloomberg.com)
Economy in U.S. Grew at 1% Annual Pace in 2Q - (www.bloomberg.com)
Hoenig Says U.S. Should Focus on Fixing Finances, Fed Has Done All It Can - (www.bloomberg.com)
World Economy Faces 50% Chance of Renewed Slump, Nobel Winner Spence Says - (www.bloomberg.com)
Fed policymaker says QE is 'most potent weapon' - (www.ft.com)
Bernanke: A Chance To Talk About Fiscal Policy? - (online.wsj.com)
Irene’s Path Menaces Busiest U.S. Airspace With ‘Major Disruption’ at Hubs - (www.bloomberg.com)
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