Oplecenter Business & Finance News

WASHINGTON – Draft legislation issued by the Ministry of Finance and the Parliament of the United States requires financial companies to pay “failure or rescue” to the government.

“Financial Services Committee and Government Obama is committed to ensuring that the ‘taxpayers’ never again called upon to accept responsibility for any business decisions of Wall Street,” said Financial Services Committee and the U.S. Treasury Department in a joint statement.

Both these institutions explains, this bill aims to address the systemic risk in the financial sector, reducing the number of financial institutions that failed or went bankrupt, ending the policy of the bailout of financial institutions “too big to fail” because it has hurt government finances (income tax).

“Increasing Financial Stability Bill aims to ensure the industry and shareholders responsible for the risk and cost of failure, not from taxpayers ‘(using state funds),’ they said. This bill will become the foundation President Barack Obama’s commitment to implement the reform of financial regulation and the use of public money for the bailout for banks and other financial companies.

In a letter to the Financial Services Committee Chairman Barney Frank of Parliament, Mr Obama congratulated the panel on the progress of “financial reform package design.” The draft bill contains a 253 page draft federal law. In the Bill, financial institutions are required to set aside funds or assets worth USD 100 billion to deal with failure or a mission to save the company.

These funds should not be used for company operations. “Settlement costs on companies that fail will be paid in advance with the company’s assets. This will hurt shareholders and creditors. This asset will be compensated for any reduction in assessments on financial firms,” they said.

“We follow the model of ‘polluters pays’. So the financial industry to pay their fault, not the state,” he said. Bill also mandates the establishment of a council in charge of inter-monitor and supervise the financial system stability. Council will report any threat to the system increased authority keuangan.Berikutnya Federal Reserve (Fed) and the federal financial institutions on financial stability control that can quickly handle problems that arise.

Other rules, obligations of financial institutions to be members of Deposit Institutions (FDIC). This is one of government’s anticipation of loss if there is a failed financial institution. Obama praised the work the Ministry of Finance and Financial Services Committee that the U.S. Parliament to act quickly to protect consumers from unfair lending practices and fraud on Wall Street.

The derivatives market will be tightened and demanded the bank to change the policy of the executive compensation. Obama acknowledged, efforts to reform the financial rules require hard work. This is required to build the financial system more stable and secure U.S. economy from the crisis in the future.

Down Consumer Trust

The level of consumer confidence in the United States (U.S.) experienced a sharp drop in unexpectedly on October period due to weak economic picture is encouraging household consumption. U.S. consumer confidence index, released Conference Board fell to as low as 47.7 in September compared to the index reached 53.4.

The number is lower than some analysts forecast that predicted a decrease to the level of thin 53.1 points. In the survey of 5000 households in the U.S. was also revealed other economic indicators of the current situation index fell to 20.7 from the beginning on September 23. Meanwhile, weakening consumer expectations from 73.7 in September to 65.7 this month.

Director of the Conference Board Consumer Research Center said Lyn Franco, consumer assessment of current conditions has grown less favorable to the view that the labor market becomes a key element in the study.

“Current situation index was the lowest in 26 years. In the short-term negative outlook has emerged with a greater proportion. Consumers fairly pessimistic about their future income which caused the limited spending sentiment during the holidays,” he said.

Earlier this month the government announced the U.S. unemployment rate rose 9.8 percent in September, the highest since last 26 years.

As you know, consumer spending contributed to 70 percent of U.S. economic activity so that the lack of consumer spending could seriously impact on the economy’s superpower. Meanwhile, U.S. Treasury Secretary Timothy Geithner on Tuesday (27/10/2009) then says that there is strong reason to expand the many government programs aimed at improving the U.S. economy from recession.

“We see various options Congress whether we should extend unemployment benefits and target programs and other economic,” said Geithner.