Tag Archives: New York Federal Reserve

Fed’s Rosengren Urges ‘Open-Ended’ Easing Program

Federal Reserve Bank of Boston President Eric Rosengren said the central bank should pursue an “open-ended” quantitative easing program of “substantial magnitude” to boost growth and hiring amid a global slowdown.

The Fed should set its guidance based on the economic outcomes it seeks and focus on buying more mortgage-backed securities, Rosengren said today in a CNBC interview. Without new stimulus, the jobless rate would rise to 8.4 percent at the end of this year and economic growth wouldn’t exceed its 1.75 percent average in the first half of the year, he said.

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U.S. Stocks Rise On Policy Bet As Earnings Beat Estimates

 

U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a third straight day, amid better-than-estimated corporate earnings and speculation global central banks will take steps to boost economic growth.

JPMorgan Chase & Co. (JPM) and Bank of America Corp. added at least 2.1 percent to pace gains among financial companies. Chesapeake (CHK) Energy Corp., the second-largest U.S. natural-gas producer, increased 9.5 percent after reporting the highest quarterly profit in the company’s history. Fossil Inc. (FOSL) surged 32 percent after forecasting earnings that exceeded analysts’ estimates on increasing sales of its Skagen brand.

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Recession, Libor, Facebook punish Europe’s banks

(Reuters) – Leading European banks reported dismal profits on Tuesday, blaming everything from the continent’s debt crisis and Spain’s property market crash to Facebook’s disastrous stock market debut.

Within a space of an hour UBS (UBSN.VX) of Switzerland, Deutsche Bank (DBKGn.DE), BBVA (BBVA.MC) of Spain and Austria’s Erste Bank (ERST.VI) delivered the bad news on an industry already beset by investigations into a number of scandals.

Deutsche Bank, Germany’s flagship lender, announced it will axe 1,900 jobs under a plan to cut costs by 3 billion euros ($3.7 billion) and streamline its business. New co-Chief Executive Anshu Jain said expectations on profitability had moved “closer to our grim scenario”.

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Swiss regulator quizzes Credit Suisse, UBS on Libor

(Reuters) – Swiss regulator FINMA said it is questioning UBS and Credit Suisse in an investigation over possible Libor interest rate rigging.

“We are actively going after information that will enable us to make a judgment on what has happened,” a FINMA spokesman told Reuters on Monday.

The two banks are not under formal investigation as Swiss banks are legally obliged to cooperate with FINMA, which regulates the country’s banks.

Credit Suisse said on July 16 it did not expect a “material” impact from the regulatory probe.

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Shrinking investment bank saps SocGen profit

(Reuters) – French bank Societe Generale’s (SOGN.PA) quarterly profit tumbled 42 percent, hit by losses at its investment bank, which it is shrinking in response to the euro zone crisis, and one-off writedowns on the value of U.S. and Russian units.

Under pressure to strengthen its balance sheet, France’s No. 2 listed bank is more than half way through a plan to slash debt and sell assets at its corporate and investment bank.

Profit at that unit, which has cut back risk since a huge rogue-trading loss in early 2008 hammered its reputation, plunged by 70 percent in the second quarter.

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LETTER: Libor rigging losses another’s gain

David Gleason wrote a remarkable primer on the Libor scandal (Libor a little part of interest rigging, July 26 ) which serves as recommended reading for anyone trying to understand this crisis.

What may confound some readers is what the impact of rigging the Libor rate by a fraction of a basis point translates to in the real world. To add more perspective to this question, we can turn to research done by Morgan Stanley on this question.

It is worth putting into numerical value what the Libor rate is. It is the reference rate for about $350-trillion of financial products. Morgan Stanley estimates that Libor rigging could possibly account for $720m of profit for each of the banks under investigation over a four-year period. The obvious question would be why would banks wilfully turn a blind eye to this? The answer is simple: greed. Compensation as a percentage of investment banks’ revenue is typically 40% to 50% of their profit, and Libor rigging serves this self-interest.

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Libor scandal: Deutsche Bank admits some staff involved

Deutsche Bank has confirmed that a “limited number” of staff were involved in the Libor rate-rigging scandal.

However, it said an internal inquiry had cleared senior management of taking part in attempts to manipulate the rate at which banks lend to each other.

Deutsche Bank also announced it is to shed 1,900 staff, mostly outside Germany, due to the European economic downturn.