- The Washington Times - Friday, July 24, 2009

LABOR

Secretary says hike will boost spending

Labor Secretary Hilda L. Solis says this week’s increase in the minimum wage will generate an extra $5.5 billion in consumer spending over the next year.

The federal minimum wage increases by 11 percent on Friday, from $6.55 to $7.25 an hour.

It is the third and final step of a three-year phased increase in the rate. Congress boosted the minimum wage to $5.85 an hour in 2007 and it rose to $6.55 last year. The latest change will benefit workers in 30 states where the state minimum wage is now at or below the federal minimum wage, or there is no state minimum wage.

DIPLOMAT

Japan nominee says alliance strong

President Obama’s nominee for chief U.S. diplomat to Japan sought Thursday to ease lawmakers’ worries that a win by Japan’s opposition party in next month’s crucial elections could signal a weakening in ties with the top American ally in Asia.

John Roos, a lawyer and Obama campaign fundraiser, said during his Senate confirmation hearing that there will be no fundamental change to the alliance, even if the opposition Democratic Party of Japan wins in Aug. 30 elections.

The DPJ, which favors a more independent stance from the United States, looks set to win big in the elections for parliament’s powerful lower house. That would deal a serious blow to the U.S.-friendly Liberal Democratic Party, which has governed Japan with only a short break since its founding in 1955.

“I believe that the DPJ will be equally committed to the strength of the alliance and the bilateral relationship,” Mr. Roos told the Senate Foreign Relations Committee, when pressed on how a new government of an ally that hosts thousands of U.S. troops could affect ties.

Mr. Roos would not predict who would win the election. He said he had seen DPJ comments suggesting dissatisfaction with perceived inequalities in the alliance.

“The relationships with the United States government are deep on both sides of the aisle,” Mr. Roos said of the DPJ and LDP.

SENATE

Governor praised as ambassador pick

Utah Gov. Jon Huntsman Jr. said Thursday he would work with the Chinese government to shore up the global economy and to persuade North Korea to abandon its nuclear weapons effort if he is confirmed as ambassador to China.

Mr. Huntsman also promised the Senate Foreign Relations Committee to pursue human rights issues and to encourage China to reduce greenhouse gas emissions. He said he was encouraged by the recent relaxation in tensions between the Chinese government and Taiwan.

“I look forward to a robust engagement with China on human rights,” said Mr. Huntsman, who was a Mormon missionary in China in his youth and speaks fluent Mandarin Chinese.

He said human rights has been “an on-again, off-again discussion” between the U.S. and China. He said he would like to “regularize and systematize” human rights talks “so that it isn’t a once-a-year discussion where the talking points are pulled out and then dispensed with.”

Mr. Huntsman indicated he intends to emphasis the opportunities for trade in emissions control and renewable energy technologies in his talks with Chinese officials on global warming.

“I know what a market opportunity this is going to be for us,” Mr. Huntsman said.

He noted that the U.S. and China together account for nearly half the world’s greenhouse gas emissions. If the two countries can’t tackle the problem, “no one is going to do it for us,” he said.

Senators were so lavish in their praise for Mr. Huntsman that the nominee quipped that he hopes he does as well at his funeral. He was introduced at the hearing by Sen. John McCain of Arizona and Utah’s senators, Orrin G. Hatch and Robert F. Bennett.

Committee Chairman John Kerry, Massachusetts Democrat, said the nomination of Mr. Huntsman - a Republican - by President Obama honors the best tradition of bipartisanship in foreign policy.

FED

Reserve to improve mortgage disclosures

The Federal Reserve on Thursday advanced proposals designed to make it easier for Americans with mortgages, or shopping for them, to better understand how the loans work.

The action comes after lax lending and, in some cases, borrowers who didn’t fully understand the terms of their home loans, ended up buying houses they couldn’t afford. That contributed to the worst collapse in the housing and mortgage markets in 70 years.

“Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances,” said Fed Chairman Ben S. Bernanke. “It is often said that a home is a family’s most important asset, and it is the Federal Reserve’s responsibility to see that borrowers receive the information they need to protect that asset.”

Among the changes, mortgage lenders would need to explain potentially risky features, such as prepayment penalties, of a mortgage in a one-page, “plain English,” question-and-answer format before a consumer applies for a loan. Improved disclosure of the annual percentage rate, or APR, to capture most fees and settlement costs paid by the borrower also would be required.

For customers with adjustable-rate mortgages, lenders would be required to show consumers how their payment might change by, for instance, by disclosing the highest monthly amount the borrower might pay during the life of the loan. Lenders also would have to notify customers 60 days in advance - versus the current 25 - of a change in their monthly payment.

SEC

Leaders want council to act as supercop

Key regulators on Thursday broke with the Obama administration, reaffirming their belief that some new powers to monitor big institutions against financial threats should go to an interagency council, not the Federal Reserve.

Some Republican lawmakers also continued to warn against endowing the Fed with new powers in an overhauled system as Congress slogs through a complex deliberation that could reshape the financial landscape in the wake of a historic crisis.

Under the administration’s financial overhaul proposal, the central bank as “systemic risk regulator” would be able to duplicate and even overrule other regulators.

But Securities and Exchange Commission Chairman Mary Schapiro and Sheila Bair, head of the Federal Deposit Insurance Corp., stressed to the Senate Banking, Housing and Urban Affairs Committee that crucial role should be played by the new stability oversight council. The body would include the Treasury Department, the Fed, and the two independent agencies headed by Miss Bair and Miss Schapiro.

They appeared before the panel a day after the administration sent Congress legislation that would make the Fed the supercop of the U.S. financial system, as well as create the new oversight council to boost coordination among regulators and raise capital requirements for financial institutions. If enacted, the administration plan would bring the most sweeping overhaul of financial rules since the 1930s.

An interagency council with strong and extensive authorities “will provide for an appropriate system of checks and balances,” Miss Bair testified. A council “with real teeth … would be highly effective,” she said.

From wire dispatches and staff reports.

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