Tags: Financial | Leadership | Crisis | Threat | us | economy | fed

Key Financial Jobs Unfilled as Economy Faces New Perils

Friday, 13 May 2011 03:04 PM

A combination of White House foot-dragging and Republican stonewalling means that hugely important positions in government that oversee the financial system are being left vacant or are held by short-term placeholders, warns The New York Times in a recent report.

Among the slots in contention are important roles in regulatory and banking agencies, some of them created in the wake of the financial crisis, including:

• The Federal Deposit Insurance Corporation (FDIC). Its head, Sheila Bair, steps down in less than a month. The agency oversaw $24.18 billion in bank failures in 2010, a figure 9 percent higher than it had forecast. FDIC sees up to $45 billion in failures coming between 2010 and 2014.

• The head of the new Consumer Financial Protection Agency has not been named. Long presumed to be the job for Harvard’s Elizabeth Warren, who fought for its creation, Republicans seek more Congressional control over the agency’s budget before allowing anyone to take charge of it.

• The Federal Housing Finance Agency — which oversees the government-backed mortgage giants Fannie Mae and Freddie Mac, which in turn own or guarantee half of all U.S. home loans — has been run by an acting chief since August. Freddie finally turned a profit after requiring billions in taxpayer loans to stay afloat. Fannie Mae is back at the well, though, seeking $8.5 billion from Treasury to make up losses.

• The Office of the Comptroller of the Currency, which oversees large banks, is run by a caretaker, and a new position at the Federal Reserve, vice chairman for supervision, sits empty, among other positions, reports the Times.

Meanwhile, a new central bank governor remains to be named. Economist Peter Diamond, a Nobel Prize winner in economics, has been thrice approved by a Senate panel but then twice blocked on the floor by the GOP. A third vote is to come.

Republicans are wary of Diamond’s likelihood of backing the Fed’s easy-money approach to the crisis. “We must be increasingly wary of the threat of inflation, yet the Fed continues to print money with reckless abandon,” U.S. Sen. Mike Johanns, R-Neb., said in a statement.

It’s a particularly tricky time for the administration. The Fed is likely to stop its unprecedented bond-buying effort on time in June, which could create a downdraft in the markets just as the economy has slowed. Growth fell to 1.8 percent in the first quarter.

Slowing U.S. growth would offset the meteoric rise in food and energy prices, but it also would put pressure on housing, which has already double dipped, and on the job market. Unemployment jumped to 9 percent in the most recent reading.

That increase was partly due to more people entering the job market, but it won’t help much if hundreds of thousands get discouraged and quit looking again in just a few months.

If you buy the Fed’s unstated reasoning behind the easing so far — the so-called “wealth effect” of higher stock values leads to increased consumer confidence — a sudden drop in equity values could tip the economy into a second recession, or at least slow growth dramatically.

Even masters of the universe hedge fund managers admit they don’t know what is next. “We’re heading for a crisis,” Leon Cooperman, chairman of Omega Advisers, told an audience in Las Vegas this week. “I just don’t know when.”

“People are scared. They don’t know what to do,” Cooperman said, according to CNBC.

“We all know we’re kicking the can down the road. We don’t know when it will hit. (Until then) equities are the best value in a bad neighborhood.”

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
Headline
A combination of White House foot-dragging and Republican stonewalling means that hugely important positions in government that oversee the financial system are being left vacant or are held by short-term placeholders, warns The New York Times in a recent report. Among the...
Financial,Leadership,Crisis,Threat,us,economy,fed
599
2011-04-13
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved