Tough Love: Federal Reserve Backhands Biggest Banks (YahooFinancial)
The U.S. Federal Reserve dealt an unkind blow to four of the country’s largest banks, slapping their “stress test” capital plans right back at them. J.P Morgan Chase & Co., Goldman Sachs Group, Inc., BB&T Corp. and Ally Financial all came up short in these annual reviews to determine how they’d handle an economic crisis in the eyes of the Fed. That reality check means the banks must resubmit their plans for approval before they can pay out shareholder dividends or buy back shares. On the positive side, 14 of the country’s largest banks had their plans accepted, indicating a much higher state of preparedness than 2008. It’ll be interesting to see what investors think of these four banks not being able to pay out dividends, as their brethren do just that.
Federal Workers Deep Freeze to Continue through the Summer (CNNMoney)
President Obama’s mandatory .5 percent pay raise for federal workers was supposed to take effect at the end of the month. That was the plan until the Senate began debating how to extend financing the government this week. Now it appears that federal employees’ current two-year pay freeze will be extended through year’s end. According to Maryland Sen. Barbara Mikulski, the elongated freeze is a necessary evil to ensure the government doesn’t shut down on March 27, when budgeted funds for the year will run out. This news comes on top of cuts imposed by the sequestration that forced some government workers to take a 20 percent pay cut. The pay freeze is expected to save some $30 billion a year… But at what cost to those federal employees?
Japanese President Defies Party, Pushes More Reform (Bloomberg)
Japanese President Shinzo Abe said that his country will join U.S.-led regional trade accord discussions, despite opposition from a large bloc of his supporters. Abe favors the accord, which would deregulate Japanese farming — a move which his Liberal Democratic Party disagrees with as it claims free-trade will only hurt farmers. Apparently, Abe is confident enough with his 70 percent approval rating to take on his own party and farmers. Japanese participation in the accord is expected to increase its gross domestic product by 3.2 trillion yen ($33 billion), if current tariffs are abolished. If nothing else, Abe’s presidency has been a breath of fresh air to a Japanese economy that has been enveloped in a cloud of recession for more than two decades.
