Business

OVERNIGHT MONEY: Bernanke talks economy, stimulus

by Vicki Needham - 07/16/13 10:20 PM ET

He has said that while the central bank could wind down and possibly end its bond-buying spree when the unemployment rate hits 7 percent, Fed officials have said interest rates wouldn’t start to rise until the jobless rate drops to at least 6.5 percent.

{mosads}While those low interest rates have boosted the housing market but,
as Bernanke has noted, they have simultaneously hurt savers who want a little
incentive to put their money into an interest-bearing account.

The aim is to gradually wind down purchases sometime this year and end the program next summer, at point by which many economists forecast that the jobless rate will be in the wheelhouse for shutting off the monetary spigot.

Right now the unemployment rate is 7.6 percent, but the economy added about 100,000 more jobs than expected in the past few months, fueling the chatter that the Fed will start the tapering process sooner.

Bernanke has been anything but straightforward in his hints about when the Fed will adjust its policy with economic expectations. But he has been clear that the central bank does not want to pull back its purchases too early and damage efforts to keep the economic recovery chugging along.

He has said he wants to see a pile of evidence that the economy is shaping up and can sail along without the tail wind of the Fed stimulus.

Looking at the economy as a whole, that “highly accommodative monetary policy for the foreseeable future is what is needed for the U.S. economy,” Bernanke said.

So we’ll see over the next couple of days if Bernanke gets any clearer on a path forward.

WHAT ELSE WE’RE WATCHING

Another IRS view: On Wednesday, the House Small Business Committee will chat with Danny Werfel, the IRS’s interim leader, to discuss how smaller companies are chosen for audits. The hearing comes as lawmakers are still churning out documents and comments on the IRS’s targeting of conservative groups seeking tax-exempt status.

Going Postal …: The House Oversight Committee will discuss on Wednesday how to push forward with efforts to overhaul the U.S. Postal Service. Amid a slew of other issues, lawmakers have stepped away from any reform bills, although they have made strides toward crafting a bill that can help the agency with its financial struggles. Postmaster General Patrick Donahoe will testify.

Looking at debt: A Senate Banking subcommittee will hold a hearing on
the consumer debt industry with officials from the Consumer Financial Protection Bureau and the Federal Trade
Commission.

Regulator reauthorization: The Senate Agriculture Committee will discuss on Wednesday the reauthorization of the Commodity Futures Trading Commission with financial experts. The agency is responsible for implementing financial rules required under the Dodd-Frank financial law.

Spend away: The House Appropriations Committee is expected to wrap up work on the fiscal 2014 spending bill for Commerce, Justice and Science, which contains $47.4 billion in total funding and is $2.8 billion below last year’s levels.

The panel also will mark up the $17 billion Financial Services and General Government spending bill.

A Senate Appropriations subcommittee approved its version of the Commerce and Homeland Security spending bills, with plans to complete them at the committee level on Thursday.

BREAKING NEWS

The wait is over: The Senate voted 66-34 on Tuesday to confirm President Obama’s nominee to lead the Consumer Financial Protection Bureau (CFPB).

After what seemed like an endless wait, Richard Cordray got the nod to officially head the agency he has been leading since January 2012.

“For nearly two years, we have been
focused on making consumer finance markets work better for the American
people,” Cordray said in a statement.

“Today’s action brings added certainty to the industries we
oversee and reinforces our responsibility to stand on the side of
consumers and see that they are treated fairly in the financial
marketplace. We will continue our essential work and each one of us,
including myself, is grateful for the opportunity to serve our country
in this important way.”

Republican Sens. Saxby Chambliss (Ga.), Tom Coburn (Okla.), Susan Collins (Maine), Jeff Flake (Ariz.), Lindsey Graham (S.C.), Johnny Isakson (Ga.), John McCain (Ariz.), Rob Portman (Ohio), Roger Wicker (Miss.), Orrin Hatch (Utah) and Lisa Murkowski (Alaska) voted with Democrats to confirm Cordray.

Earlier Tuesday, 17 Republicans joined Democrats in a 71-29 vote to end debate on Cordray’s nomination.

ECONOMIC INDICATORS

MBA Mortgage Index: The Mortgage Bankers Association releases its weekly report on mortgage application volume.

Housing Starts-Building Permits: The Commerce Department releases its June report on the number of residential units under construction or with building permits, which allow work to start and are a forward-looking indicator of where the sector is headed.

Fed’s Beige Book: The Federal Reserve releases its July summary on current economic conditions ahead of the Federal Open Market Committee’s next meeting on July 30-31.

LOOSE CHANGE

Farm bill vote switching: Maplight put out a fascinating analysis of Thursday’s farm bill vote on Tuesday. The report found that those Republican lawmakers who switched from a “no” to a “yes” on the revised farm bill — a measure without the food stamp program that traditionally attached — had received, on average, twice as much money in campaign donations from farm-bill-supporting industries than those who remain opposed.

WHAT YOU MIGHT HAVE MISSED

— Landrieu slips controversial flood insurance provision into spending bill
— Portman presses for a dedicated inspector general at consumer agency
— Watt nomination vote postponed until Thursday
— Top Dem: No evidence of political motivation in IRS case
— Cordray vote marks end to consumer bureau standoff
— Senate panel advances Commerce, Homeland spending bills
— Mikulski outlines timeline on Senate spending bills
— Senate ‘nuclear’ deal raises budget hopes
— IRS accused of disclosing tax records of political candidates, donors
— Warren keeps up pressure on Sallie Mae
— Home builder confidence soars to 7-year high
— House to send farm bill to Senate
— IRS cancels furlough day for employees
— Industry leaders express support for Senate’s FHA plan