Fed Fever, China Deals
Markets are heartened by reports that the Fed may not be done working on the credit crunch. China and U.S. officials launch high-level talks with a food-safety pact. And Citigroup names Vikram Pandit as its new chief executive.
EWS AT A GLANCE
The Fed might not be done
The Federal Reserve is planning to follow up its 25 basis point rate cut yesterday with new measures to inject liquidity into the market, according to news media reports. (Reuters) The Wall Street Journal reported that the Fed is examining other tools, including more cuts to the discount rate, to get banks to increase lending, and the Financial Times says that the Fed could unveil as soon as today a new liquidity facility that would auction loans to banks. (MarketWatch) Following yesterday’s broad selloff, the expectations for more Fed action helped European markets reverse early losses this morning and boosted market sentiment in the U.S. (CNNMoney.com)
China, U.S. reach food safety pact
U.S. and Chinese officials signed two agreements that will give U.S. regulators more control over certain foods and medicines imported from China. Exporters of those goods will have to register with Chinese food safety agencies and agree to annual inspections. U.S. officials called the deals a good trust-building first step. (Los Angeles Times, free registration required) The pacts precede high-level economic talks today in Beijing. U.S. Treasury Secretary Henry Paulson signaled that the focus will be more on the safety of Chinese imports than on currency issues that dominated past talks. “It’s something where there is actually a mutual interest in cooperating,” said trade economist Gary Hufbauer. (Bloomberg)
Citi names newcomer Pandit as CEO
Citigroup named Vikram Pandit, the head of its investment banking division since October, as its new chief executive, and appointed acting CEO Sir Win Bischoff chairman. Many analysts had expected acting chairman Robert Rubin to keep that post. (Bloomberg) Pandit built a reputation as a strategic investment banker, but he has never run a public company, and neither he nor Bischoff have much experience with consumer banking. Some analysts were skeptical that the new leadership team had the clout or résumé to fix the massive and complex company. “There was some hope that somebody with a bigger name would be chosen,” said Lee Delaporte at Dreman Value Management. (Reuters)
When your property line is the shoreline
When you own a house on the beach, your property line isn’t exactly fixed. And when the ocean creeps up, you may find that your remaining property now belongs to the state. Homeowners and local governments are arguing over beachfront property lines in Texas, Hawaii, California, New Jersey, and Florida. The biggest fight has been over public access. Texans, for example, legally have unimpeded access to the beach. James Bedward is the mayor of Surfside Beach, which has moved or destroyed all but 14 houses that, thanks to erosion, are now on public beach. “It might be your land,” he explains. “But once it becomes submerged, it’s no longer that way.” (The Wall Street Journal)
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