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Tuesday, February 16, 2010


Most Asian markets advance, with resource shares lifting Nikkei
Most Asian markets closed Tuesday with modest gains as a positive quarterly update from Westpac Banking boosted banks in Australia and higher commodity prices spurred resource shares in Tokyo. Japan's Nikkei 225 added 0.2%, while Australia's S&P/ASX 200 and South Korea's Kospi Composite climbed 0.5%. New Zealand's NZX 50 rose 0.9%, while India's Sensex was up 0.8% in late trading. Markets in China, Taiwan, Hong Kong and Singapore were closed for Lunar New Year. The Wall Street Journal (16 Feb.)

Eurozone gives Greece 1 month to make progress on cutting deficit
Finance ministers from the eurozone took a get-tough approach with Greece, warning the country of additional spending cuts and taxes if a report due March 16 shows that the Greek government is not making progress in slashing its budget deficit. They told Greece it must stick with an austerity plan presented to the EU that promises to cut this year's budget deficit from 12.7% to 8.7% of GDP. "Greece has to actually deliver and is beginning to deliver," said French Finance Minister Christine Lagarde. Financial Times (tiered subscription model) (16 Feb.)

Obama administration turns to foreign investors to fund housing
With the Federal Reserve's program of buying mortgage-backed securities scheduled to shut down March 31, the Obama administration is looking to sovereign-wealth funds and other foreign investors to step in and fill the gap. Analysts are skeptical of the effort. Most funds that invest for foreign governments want high yields offered by developing markets and are interested in investments that diversify away from the U.S. dollar, said Jan Randolph, head of sovereign-risk analysis at IHS Global Insight. The Washington Post (16 Feb.)

Home Loan Bank aims to force Wall Street firms to buy back MBS
The Federal Home Loan Bank of Seattle has filed 11 separate lawsuits against Wall Street financial institutions, striving to force the banks to buy back mortgage-backed securities that have soured. The Seattle bank alleges that underwriters misled it about the quality of the securities, many of which were made up of subprime and Alt-A mortgages. The Wall Street Journal (2/16)

SEC's Schapiro falls short of vow to quickly make changes
Mary Schapiro took the lead at the Securities and Exchange Commission last year, vowing to quickly pursue short-selling restrictions and other changes. More than a year later, the SEC has not established additional limits on short selling or made most of the other regulatory changes it had proposed. Schapiro defended the SEC's progress. "It can take more time than one might have thought at the outset," she said. "We have to understand the real-life implications of what we're doing, the unintended consequences. We need to digest all the comments and all the economic analysis. And that leads us down a path that sometimes isn't 100% predictable at the beginning." The Washington Post (2/16)

Fed sits on paper losses on assets acquired in Bear Stearns rescue
The U.S. Federal Reserve's rescue of Bear Stearns resulted in significant paper losses for the central bank in relation to real estate assets it acquired. The Fed holds the assets, including debt used to finance the acquisitions of Extended Stay Hotels and Hilton Hotels, in a vehicle called Maiden Lane I. Financial Times (tiered subscription model) (16 Feb.)

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