World News!

Canada

• Research mathematicians at the University of Alberta have proposed that the number 16,777,216 be officially named a "fillion".

China

• Chinese Q2 GDP increased at an annual rate of 9.5% (2.2% from Q1 to Q2), good news for those concerned about inflation but still the slowest rate of growth since Q3 2009.
• The China Securities Regulatory Commission will be conducting stress tests on its brokerage industry.
• A study by the Chinese Academy of Social Sciences said that there was a 41% decrease in Chinese websites from 2009 to 2010.  They insist that there is no link between this and China's increasingly tight internet regulations, citing a 79% increase in individual web pates over the same period.

European Union

• Plans for a special summit on a second Greek bailout ran off the rails on German refusal to participate.  The feeling of the German government is that Greece is funded until September, so why rush?

Italy

• The IMF has asked Italy to decisively implement a package of austerity measures to ensure "a positive effect on market sentiments".

Ireland

• Moody's has cut Ireland's sovereign debt rating to Ba1 (the upper end of non-investment grade), citing their concerns that the PIIGS nation will be forced to seek a second bailout.

Japan

• Prime Minister Naoto Kan has called for development of renewable energy sources in an effort to make Japan a nuclear-free nation.
• Joji Morishita of the Institute of Cetacean Research has announced that their research fleet[1] will be returning to Antarctic waters to study whales[2], taking advantage of the fact that the International Whaling Commission allows member nations to issue "scientific permits" for the killing of a set number of whales.  Typically, the Japanese government issues "scientific permits" for several hundred whales per year.  Presumably, it feels the ICR is being ecologically friendly by recycling the dead whales into convenient single-serving packages.

Libya

• According to French Foreign Minister Alain Juppe, Muammar Gaddafi has been in contact with several nations, exploring options for stepping down from power and leaving.

Syria

• An explosion hit a gas pipeline in northeastern Syria.  Official sources are reporting no casualties and only limited damage, and the cause is currently unknown.
• Syria has condemned Secretary of State Clinton's remarks (stating that Brutal Dictator[3] al-Assad had "lost legitimacy" to rule and that he was "not indispensable") in the wake of the "completely spontaneous and absolutely not instigated by the Syrian government"[4] attacks on the French and US embassies in Damascus.

United States

• In the wake of the New Corporation hacking scandal, Senator Jay Rockefeller has called for the Commerce Committee to investigate whether journalists working for the company broke US law.
• Juan Mendez, the UN Special Rapporteur on Torture, has expressed serious concerns restrictions placed by the US government on his attempts to meet with PFC Bradley Manning.  He states that the US requirement that all of his communications with Manning be monitored are a violation of long-standing UN rules applied to official UN interviews with inmates held anywhere in the world.

[1]  A research fleet with harpoon cannons.

[2]  Specifically, to study how how the ability of whales to survive having harpoons fired into them, whether they taste better as a simple shabu-shabu or marinated in soy sauce, and then the most efficient means of packaging them for resale.

[3]  Oops.  I meant "President'.  Darn those typos.

[4]  Nudge, nudge.  Wink, wink.  Know what I mean?

U.S. Import and Export Price Indexes News Release

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The latest U. S. Import and Export Price Indexes news release (http://www.bls.gov/news.release/pdf/ximpim.pdf) was issued today by the Bureau of Labor Statistics. Highlights are below.
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U.S. import prices fell 0.5 percent in June, the first monthly decline since June 2010. Declining fuel and nonfuel prices both contributed to the overall decrease. U.S. export prices ticked up 0.1 percent in June after rising 0.2 percent in May.

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FW: Consumer Financial Protection Bureau Outlines Bank Supervision Approach

Consumer Financial Protection Bureau Outlines Bank Supervision Approach

CFPB Will Begin Its Examination Program for Large Banks on July 21

WASHINGTON – The Consumer Financial Protection Bureau (CFPB) today outlined the agency's approach to supervising large depository institutions to ensure compliance with federal consumer financial protection laws – a supervisory process that will begin on July 21, 2011.

"The new consumer agency is here to make sure that markets work for American families, and our bank supervision program is a big part of that," said Elizabeth Warren, Special Advisor to the Secretary of the Treasury on the CFPB. "Starting on July 21, we will be a cop on the beat – examining banks and protecting consumers."

Scope of Bank Supervision Program

Leading into the recent financial crisis, consumer financial protection authorities were spread among seven different federal agencies. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) streamlined consumer protection oversight authority into the CFPB – promoting greater efficiency and accountability for American consumers.

The consumer agency will conduct examinations to help ensure that consumer financial practices at large banks conform with consumer financial protection legal requirements. The CFPB's bank supervision program will oversee the 111 depository institutions that have total assets over $10 billion.  Subsidiaries and all other affiliates of these institutions also fall under the CFPB's authority.  These institutions collectively hold more than 80 percent of the banking industry's assets.

Staffing and Training

A diverse and talented team of examiners throughout the country, managed out of satellite offices in Chicago, New York, San Francisco, and Washington, D.C., will form the front line in the CFPB's supervisory efforts.   Each of these satellite offices will be the nexus for CFPB supervision in their respective areas of the country.  Having examiners and field managers focused on these regions will help ensure that the CFPB understands the business practices and dynamics in different markets throughout the country.  The examiners working in those regions will spend much of their time on-site at depository institutions and at other consumer financial services companies. 

A large part of the CFPB's supervision staff will be made up of experienced examiners: By the end of July, the CFPB supervision team will include more than 100 staff members transferring directly from the Federal Deposit Insurance Corporation, the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. The CFPB expects eventually to have several hundred examiners on board, coming from a variety of backgrounds, including state regulatory agencies and industry.  Experienced examiners will sharpen their skills in workshops before being deployed, and examiners new to consumer financial protection will receive extensive technical and professional skills training. 

Supervision Process

CFPB supervision will be an on-going process of pre-examination scoping and review of information, data analysis, on-site examinations, and regular communication with regulated entities, prudential regulators, and as well as follow-up monitoring. For most depository institutions supervised by the CFPB, periodic examinations will be conducted.  For the largest and most complex banks in the country, the agency will implement a year-round supervision program that will be customized to reflect the consumer protection and fair lending risk profile of the organization. 

Monitoring will be a constructive process, ensuring that, where required, consumer risks are addressed and compliance programs are strengthened. Analyzing information that is unique to the institution – for example, lending activities, fee structures, and marketing practices – as well as assessing product trends at the market level, will also allow the CFPB to detect and address risks to consumers as they develop. Institutions will generally be advised of upcoming examinations and receive status updates throughout the supervision process.

During an examination, the CFPB will assess each institution's internal ability to detect, prevent, and remedy violations that may harm consumers by reviewing the institution's internal procedures and conducting interviews with personnel. Examiners will look at the products and services the institution offers, with a focus on risk to consumers. The institution's compliance with requirements during the entire life cycle of the product or service will be reviewed, including how a product is developed, marketed, sold and managed.  Fair lending reviews will be conducted to detect and address potential discriminatory practices, and, more generally, the institution's policies and practices will be evaluated to ensure compliance with consumer financial protection laws and regulations. 

If a company is not fully compliant, the CFPB will seek corrective actions, including strengthening the company's programs and processes to ensure that such violations do not recur and, where appropriate, that remedies are instituted. When necessary examiners will coordinate and work closely with CFPB's enforcement staff to implement appropriate enforcement actions to address harm to consumers.

Next Steps

On July 21, the CFPB will reach out to banks and their affiliates to establish channels of communication and to introduce them to the agency's supervision and examination process. The CFPB has already made great strides in reviewing information received from federal and state regulatory agencies about the depository institutions for which it will assume responsibility.  In the weeks following July 21, CFPB examiners and managers will:

1. Become familiar with the structure, business strategies, operations, and risks of the organizations they will be supervising;
2. Communicate and coordinate the CFPB's efforts with federal and state regulatory agencies;
3. Finalize the CFPB's plans to supervise and examine the organizations under its jurisdiction; and
4. Begin conducting the agency's first round of on-site examinations.

This process will begin remotely in most instances, and CFPB examiners will then begin on-site reviews at the supervised institutions to continue their work.  Over the next several weeks, the CFPB will conduct further outreach to banks that fall under its jurisdiction. The CPFB will provide additional information via letter to the 111 institutions, and will conduct informational roundtables starting in early August.

The CFPB will post on its website the initial phase of its Examination Manual, which is the field guide for examiners supervising both banks and other consumer financial services companies. The publication of the manual will be accompanied by a general invitation for feedback and suggestions for improvements from the banking industry, nonbank financial services companies, federal and state agencies, consumer and community groups, and the general public.   ​

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Questions? Contact Us

World News!

Australia

• In an effort to cut carbon emissions, the Australian government plans to levy a AU$25 per metric ton tax on carbon dioxide emissions on the country's 500 worst polluters.  The plan is fairly unpopular, as it is expected to drive up household energy costs.

Canada

• Canada has withdrawn from the UN Conference on Disarmament, a permanent 65-member-nation conference on nuclear disarmament.  North Korea is the current chair of the conference, and Foreign Affairs Minister John Baird has stated "North Korea is simply not a credible chair of a disarmament body.  The fact that it gets a turn chairing a United Nations committee focused on disarmament is unacceptable, given the North Korean regime's efforts in the exact opposite direction."

Egypt

• Masked gunmen forced guards at a terminal on the pipeline supplying gas to Israel and Jordan to leave the terminal at gunpoint before blowing it up.  This is the fourth attack on the pipelines this year.

European Union

• In a move that surprises nobody, the EU has acknowledged that it may need to accept some form of sovereign debt default to cut Greek debt.

France

• President Sarkozy has announced plans to withdraw a quarter of the French troops stationed in Afghanistan by the end of 2012.  This constitutes about 1000 soldiers.

Israel

• By a 47-36 vote, the Israeli parliament has passed a law making it illegal for any Israeli individual or organization to boycott the (illegal under international law) settlements in the West Bank.

Japan

• It has come out that between fifty and one hundred workers at the Kyushu Electric Company posed as ordinary citizens and lobbied for Kyushu's Genkai plant to be reopened.  Their efforts accounted for more than 30% of all the messages supporting the reopening of the plant.

Pakistan

• The United States has suspended $800 million in military aid to Pakistan.

Syria

• Supporters of the Syrian government stormed the US and French emgassies in Damascus, and then the residence of the US ambassador.  One building was damaged, but there were no injuries to embassy personnel and Marine Corp guards were able to disperse the - shall we say it? - "armed terror mob".[1]

United States

• Cisco Systems Inc has announced plans to eliminate around 10,000 jobs - about 14% of it's work force - to revive profit growth.  The company plans to release more details during its August 11 earnings conference call.
• Anonymous is back in the news, this time for hacking Booz Allen Hamilton, a US military contractor that offers "cybersecurity solutions".  They plan to release some 90,000 military email logins.
• In "gun control fail" news, Arizona state Senator Lori Klein made news when she carried a loaded handgun into the state Capitol - which is, by definition, an illegal action.  Her attempts to become a flash point for handgun rights may have been hampered when she later pointed the loaded handgun (which has a laser sight but no safety) at a reporter, while stating "Oh, it's so cute."  She then said the reporter didn't need to worry because "I just didn't have my hand on the trigger."

[1]  Of course, given the general lack of response from Syrian security forces, and the general popularity of Brutal Dictator[2] Assad, it is probably not irrational to assume that the "supporters" were Syrian security forces.

[2]  Excuse me.  That was a typo.  Clearly, I meant to type "President".

US International Trade In Goods And Services, May 2011

"International Trade" is, in this context, the technical term for the US trade deficit[1].  Analysts really like to look at this figure, because trade deficits are directly subtracted from GDP.  If the deficit shrinks, there is joy all around.  If it expands, despair.

 

April's results were surprisingly good, showing the trade deficit narrowing to $43.7 billion - beating expectations $5.3 billion.  Most of it was driven by increases in exports in industrial supplies and materials, and in capital goods, and by a decrease in imports of automotive vehicles and supplies and of industrial supplies.  The Econoday-surveyed analysts are feeling more optimistic for May, and are looking for a further $1 billion drop to a trade deficit of $42.7 billion.

 

For the details, we turn to a joint release by the US Census Bureau and the US Bureau of Economic Analysis.  A joint release that puts the boot in, so to speak, on that optimism.  Far from declining $1 billion, it ballooned $6.5 billion to a $50.2 billion deficit.  This was driven by a decrease in industrial supplies and materials exports and by an increase in imports of industrial supplies and goods and of capital goods.

 

[1]  Technically, it's the measure of whether we have a surplus or a deficit, and how much of one or the other we have.  But really.  We haven't run a trade surplus since 1975.  So why pretend?

World News!

Egypt

• In "is it still February" news, thousands of Egyptians gathered in Cairo's Tahrir Square to demand that the nation's military dictatorship implement promised political changes more rapidly than has been done so far.

Libya

• The US House of Representatives has voted to deny funding for any direct help to the Libyan rebels - including weapons, training, and advice.  A related proposal to stop US participation in the NATO airstrikes was defeated.

Sweden

• Surgeons in Sweden have performed the world's first synthetic organ trnsplant, implanting a laboratory-grown windpipe into a 36-year-old cancer patient.

Syria

• The Syrian government has expressed outrage over Ambassador Robert Ford's trip to Hama, claiming that it "is obvious proof of the implication of the United States in the ongoing events".  Now, while it may be a stretch to say that the "armed terror gangs"[1] are being sponsored by the US, the official position of the US State Department is that the purpose of his trip is "to make absolutely clear with his physical presence that we stand with those Syrians who are expressing their right to speak for change."  So they may have the vague makings of a point.

United Kingdom

• When hell is full the dead will walk the earth, and the city of Bristol will be prepared with a top secret contingency plan.  The contingency plan also states that city employees "fully qualified in zombie handling may qualify for partial exemption and accreditation in the training for handling pirate outbreaks and for spotting the difference between genuine hot air balloons and evil, giant, floaty space aliens."

United States

• With Rupert Murdoch and News Corp all over the news right now, Reuters has prepared a helpful graphic showing exactly what businesses that company owns.
• Unsurprisingly, yesterday's meeting between President Obama and House and Senate leaders about the debt ceiling produced no results.  The Republican leadership proposed a six to eight month extension, while the President held out for a deal that would last at least through the November 2012 elections.
• Fitch Ratings has downgraded Minnesota's credit rating from AAA to AA+, citing the state's use of nonrecurring revenue sources to cover budget shortfalls, and the fact that the state has been shut down since July 1.

[1]  Have they actually committed acts of terror?  Well, some of them might have blood-borne diseases.  Lots of blood flies around when you're getting savagely beaten by the police, so the Syrian government would probably make the case that they're engaging in bioterrorism.

Commissioner's Statement on the Employment Situation News Release

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The latest Commissioner's Statement on the Employment Situation (http://www.bls.gov/news.release/pdf/jec.pdf) was issued today by the Bureau of Labor Statistics. The text is below.
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Advance copies of this statement are made available to the press under lock-up conditions with the explicit understanding that the data are embargoed until 8:30 a.m. Eastern Daylight Time.

Statement of

Keith Hall
Commissioner
Bureau of Labor Statistics

Friday, July 8, 2011

Nonfarm payroll employment was essentially unchanged in June (+18,000), and the unemployment rate, at 9.2 percent, also changed little. Over the past 2 months, job growth has slowed markedly. Employment rose by an average of 215,000 per month from February through April of this year, compared with an average of 22,000 for May and June.

Mining employment continued to expand in June, with a job gain in support activities for mining (+7,000). Employment in professional and technical services also continued to increase (+24,000). The industry has added 245,000 jobs since reaching a recent low in March 2010. Leisure and hospitality employment edged up over the month (+34,000).

Employment in manufacturing was flat in May and June, following 6 months of gains that totaled 164,000. Employment in temporary help services changed little in June and has shown little net growth so far this year. Most other private-sector industries showed little or no change over the month.

Employment in government continued to trend down (-39,000) in June. Federal employment declined by 14,000. The number of jobs in both state government and local government continued to trend down over the month and has been falling since the second half of 2008.

Average hourly earnings of all employees on private nonfarm payrolls were down by 1 cent in June to $22.99. Over the past 12 months, average hourly earnings have risen by 1.9 percent. From May 2010 to May 2011, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 3.4 percent.

Turning now to measures from the household survey, the unemployment rate was 9.2 percent in June, and 14.1 million
people were unemployed. Since March, the unemployment rate has risen by 0.4 percentage point, and the number of unemployed persons has increased by 545,000.

The employment-population ratio declined to 58.2 percent in June. Among the employed, the number of individuals working part time who preferred full-time work was essentially unchanged at 8.6 million.

The labor force participation rate was little changed, at 64.1 percent, in June. Among those outside the labor force-- persons neither working nor looking for work--the number of discouraged workers in June was 982,000, down from 1.2 million a year earlier. These individuals were not looking for work because they believed no jobs were available for them.

In summary, nonfarm payroll employment in June was essentially unchanged for the second consecutive month. The
unemployment rate, at 9.2 percent, was 0.4 percentage point higher than in March.

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