OVERNIGHT MONEY: Geithner’s tenure ends

“I knew with a fair degree of confidence by the summer of ’09 that the cumulative actions we took, on top of what Paulson and Bernanke did, was going to work. I was very confident about that by that time. Even though we still had a long, rough road ahead of us.”

{mosads}The most frustrating part of his job, he said, was effectively “relaxing the political constraints that exist on policy.”

“It has been very hard since then to get out of the American political system more room for maneuver both on near-term support for the economy, as well as reforms that would lock in a sustainable fiscal path,” he said.

“That is the most frustrating thing, to get the political system to embrace better policies for the country.”

LOOSE CHANGE

Tri-trillion: A trillion here, a trillion there, and soon you’re about real money. The Federal Reserve crossed a milestone Thursday, as its balance sheet topped $3 trillion for the first time in its history. As the central bank has kept up its monthly purchases of billions of dollars worth of bonds in its “quantitative easing,” its balance sheet has gotten mighty plump. And with the Fed still buying up bonds until the unemployment rate dips significantly, expect it to just get larger going forward.

White knight: President Obama’s pick of Mary Jo White as the next head of the Securities and Exchange Commission (SEC) so far seems to be raking in a lot of praise and virtually no criticism. Wall Street reform groups and Democrats have praised the pick of the former federal prosecutor, as have some Republicans. 

Now you can add a Wall Street titan to the mix. JPMorgan Chase CEO Jamie Dimon told Fox Business Network Thursday that White was “extremely capable, bright, tough and a perfect choice” to head the watchdog.

But it’s not just Wall Street backing White’s bid. AFL-CIO President Richard Trumka said her stint as a prosecutor left her “universally respected” and that her nomination was just another important step in “holding corporate wrongdoers accountable.”

The president also tapped Richard Cordray to stay at the Consumer Financial Protection Bureau (CFPB). Cordray was installed as the agency’s chief as a recess appointment, a move that angered many Republicans. 

Congressional Republicans and some financial groups have called for changes to the bureau, which include a board to run the agency instead of a one-person head. 

CFTC change-up: Just as President Obama named a few new picks to oversee Wall Street, he lost another. Jill Sommers, a Republican commissioner of the Commodity Futures Trading Commission (CFTC), announced Thursday that she was resigning from the regulator after serving for five years. 

CFTC Chairman Gary Gensler praised her “clear and consistent voice,” saying it was an honor to work with her on a range of issues, including implementing the Dodd-Frank financial reform law.

House Agriculture Committee Chairman Frank Lucas (R-Okla.) called Sommers a “voice of reason” while at the CFTC, and can “say with certainty she will be missed.”

Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) shared that sentiment. 

“Her hard work and contributions are greatly appreciated and will be missed.”

Decisions on derivatives: Rep. Dave Camp (R-Mich.), the House’s top tax writer, on Thursday released a proposal to overhaul the tax treatment of financial products that played a role in the 2008 fiscal crisis, The Hill’s Bernie Becker reports. 

Camp said his plan, part of a broader tax overhaul, would help modernize a tax code that has not kept track with Wall Street’s use of derivatives, swaps and other complex instruments.

“Updating these tax rules to reflect modern developments in financial products will make the code simpler, fairer and more transparent for taxpayers; and it will also help to minimize the potential for abuse that has occurred in the past,” Camp, the chairman of the House Ways and Means Committee, said in a statement.

Camp’s plan would revamp, among other things, how frequently derivatives are valued for tax purposes, how hedged risks are treated on the tax side and rules for how securities can be reacquired.

But the framework from the Ways and Means chairman does not examine certain key issues, such as the tax treatment of interest paid on debt, which generally can be deducted, and interest paid on equity, which cannot.

And the draft underscores that policymakers, who already face stark partisan differences on taxes, also must tackle dense technical challenges in their attempts to overhaul a code that stretches for 4 million words. Camp has vowed to pass a tax reform measure out of his committee this year. 

ECONOMIC INDICATORS 

New Home Sales: The Commerce Department releases its December report on new privately owned single-family houses sold and for sale. New home sales usually have a lagged reaction to changing mortgage rates, which are at historic lows. They also tend to be stronger early in the business cycle when pent-up demand is strong, and they fade later in the cycle as the demand for housing is sated. 

WHAT YOU MIGHT HAVE MISSED

— Business leaders, lawmakers press for trade promotion authority

— First-time jobless applications hit five-year low

— White House official: Corporate tax reform should boost green energy

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