FAREWELL, TIM GEITHNER ? At Timothy Geithner?s goodbye party yesterday, President Barack Obama joked how the outgoing Treasury secretary was forever telling him it was the second inning of the economic recovery. Months would go by and the president would ask again. The answer? Still the second inning. Obama joked that he had to explain to Geithner that baseball was a nine-inning game. Obama also described Geithner as an island of calm in a team full of noisy, blustery economic advisers. (No, he never mentioned Larry Summers by name).
It?s worth noting as Geithner heads for the exit on Jan. 25 that an economy that once appeared on the brink of collapse is now growing, and a financial system that nearly fractured is again functional. The widely loathed Wall Street bailout turned a profit. Geithner critics quibble with TARP accounting and argue Dodd-Frank did not go far enough to punish big banks. But judging where we are against where we were, it?s hard not to credit the man?s service. What will Geithner do next? Who knows? But keep your eye on the Federal Reserve down the road. Ben Bernanke won?t be there forever.
TWEET OF THE NIGHT ? POLITICO?s @IsaacDovere: ?outgoing & incoming Treasury Sec break bread at Ristorante Tosca ? Geithner & Lew have long dinner after Geithner's goodbye party?
M.M.-IMAGINED DINNER CONVERSATION ? ?Anyway, Jack, best of luck with all that debt ceiling stuff. Should be a good time! Oh, and I think there may be some extra change in my desk if we need it after the X Date. By the way, I saw your Citigroup comp number; dinner?s on you, bud.?
FIRST LOOK: GE GLOBAL INNOVATION BAROMETER ? GE this morning is launching its Global Innovation Barometer, looking at the pace and nature of innovation across the global economy. From the findings: ?The pace of innovation is challenging local economies, leaving business leaders conflicted between an appetite for globalization and protectionist tendencies. ?
?Collaboration is perceived as the key to increased business innovation success, with emerging markets embracing the collaborative innovation trend more strongly than western, developed economies. ? Access to new technology and the possibility to enter new markets are the biggest drivers of collaboration, while IP theft, lack of trust and fear of talent poaching are biggest deterrents.? Full results: http://goo.gl/2OwGk
MEET THE NEW WHITE HOUSE CHIEF OF STAFF ? POLITICO?s Josh Gerstein: ?Obama plans to name Deputy National Security Adviser Denis McDonough as his next chief of staff. ? McDonough would replace Jack Lew. ? By selecting McDonough, Obama is opting for the familiar: a trusted aide who?s been at his side since the 2008 campaign and is credited with keeping the administration?s internal wheels turning smoothly on foreign policy issues. But McDonough brings less experience than his predecessors with another typical part of the job: fielding sometimes angry salvos from members of Congress with home-district concerns about aspects of the administration?s policy or budget decisions. McDonough has been involved in just about every major national security decision made by Obama since he took office, from the surge in U.S. troops in Afghanistan to the launching of the commando raid that killed ? Osama bin Laden.?
WHAT?S UP WITH THE PENCIL? ? ?The pencil almost always tucked behind one of McDonough?s ears seems to signal a staffer ready to dive into the pros and cons of a thorny issue rather than hobnob with politicians or woo CEOs. Administration officials expect many of the congressional relations duties to fall to Vice President Joe Biden and Lew, who?s been nominated as Treasury Secretary.? http://goo.gl/b7zLt
INAUGURAL FUNDRAISING SETS STAGE FOR LEGACY ? Bloomberg?s Lisa Lerer and Jonathan D. Salant: ?For his second inauguration, Obama plans to raise $50 million from individuals and corporations. Financing his career after leaving office will cost orders of magnitude more: The price tag of his presidential library alone could easily exceed $500 million, according to presidential library experts. Aides, who asked for anonymity to discuss strategy, say raising that amount of money will be impossible unless they build bridges to corporate donors ? and give their exhausted, longtime political campaign supporters a break.? http://goo.gl/Gwc09
MORGAN STANLEY: WASHINGTON SLOWS ECONOMY ? Morgan Stanley analysts Vincent Reinhart, David Greenlaw and Ted Wieseman: ?The Morgan Stanley Business Conditions Index fell 9 points to 42 percent in January, as hopes regarding fiscal cliff negotiations fizzled.?With another prolonged, high-stakes political circus expected in the coming months, fiscal policy uncertainty remains high. Business conditions expectations turned lower, and hiring remains subdued.?
THIS MORNING ON POLITICO PRO FINANCE ? Tony Romm and MJ Lee on concerns in the administration and on the Hill over cyberattacks on banks [http://politico.pro/X8V3Q5] ? Kate Davidson with more details on the deal between regulators and banks to end the foreclosure reviews [http://politico.pro/U2cEMR] ? To learn more about Pro's subscriber-only coverage ? and to get Morning Money every day before 6 a.m. ? please contact Pro Services at (703) 341-4600 or info@politicopro.com.
GOOD THURSDAY MORNING ? The greatest trick Manti Te?o?s girlfriend ever pulled was convincing the world she didn?t exist: http://goo.gl/ULaL1. Send your tips and comments: bwhite@politico.com; and follow on Twitter: @morningmoneyben?and @POLITICOPro.
DRIVING THE DAY ? Bank of America, Blackrock and Citigroup report fourth-quarter earnings ? Initial jobless claims at 8:30 a.m. EST expected to dip to 368,000 from 371,000 ? Housing starts also at 8:30 a.m. expected to rise to 890,000 from 861,000 ? Philly Fed at 10 a.m. expected to rise to 6.0 from 4.6 ? Chief economists from the nation?s largest banks will present their economic forecasts and monetary policy predictions at 10 a.m. at the American Bankers Association headquarters in D.C.
** A message from CIT: Growmerica? [groh-mer-i-kuh] Definition:?Growth opportunities created when CIT finances America?s small and middle market businesses. CIT provides credit access to businesses in your communities, contributing to a stronger economy for all Americans. Visit?cit.com. **
TRANSITIONS: GOOLSBEE TEAMS UP WITH WOLF ? Former CEA Chairman and longtime Obama economic adviser Austan Goolsbee has signed on as a ?strategic partner? to 32 Advisors, the firm set up by former UBS banker Robert Wolf, also a close Obama friend. http://goo.gl/fblTn
NEW THIS MORNING: CFPB FORECLOSURE RULES ? Per release off embargo at 12:01 a.m.: ?Today the Consumer Financial Protection Bureau (CFPB) issued rules to establish new, strong protections for struggling homeowners facing foreclosure. The rules also protect mortgage borrowers from costly surprises and runarounds by their servicers. ? The CFPB?s mortgage servicing rules ensure that borrowers in trouble get a fair process to avoid foreclosure. ? Under the CFPB?s new rules, dual-tracking ? when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure ? is restricted.?
NAFCU ON CFOB RULES ? Per the National Association of Federal Credit Unions: ?We very much appreciate the CFPB?s raising the small issuer exemption to 5,000 transactions from parts of the mortgage servicing rule, yet we remain concerned as to the ultimate regulatory costs. ? At the end of the day, while we appreciate the CFPB?s charge, we are concerned that in the end it will be harder and more expensive for consumers to finance a home.?
JPM CUTS DIMON?S PAY ? WSJ?s Dan Fitzpatrick on Page C1: JPMorgan Chase directors cut Chief Executive James Dimon's pay by 50 percent for 2012, as the board took management to task for a trading debacle that cost the nation's largest bank more than $6 billion. The move came as the New York company posted record 2012 net income of $21.3 billion. The pay cut ends Mr. Dimon's reign as king of Wall Street CEO compensation. Mr. Dimon's pay was set at $11.5 million, down from $23.1 million the year before. ?
??I respect their decision,? Mr. Dimon told reporters Wednesday. When asked for his gut reaction to the pay cut, he said, ?Nope, you're not going to get it.? ? Regulators this week issued enforcement orders citing lax risk management at the bank, and at least half a dozen other regulatory or law-enforcement agencies are conducting inquiries into the trades, internal accounting and risk controls at the bank and the adequacy of its public disclosures.? http://goo.gl/aZPJh
TOP STORY: CHINA BETS HUGE ON COLLEGE ? NYT?s Keith Bradsher on Page A1: ?China is making a $250 billion-a-year investment in what economists call human capital. Just as the United States helped build a white-collar middle class in the late 1940s and early 1950s by using the GI Bill to help educate millions of World War II veterans, the Chinese government is using large subsidies to educate tens of millions of young people. ? China wants to move up the development curve by fostering a much more broadly educated public, one that more closely resembles the multifaceted labor forces of the United States and Europe. ?.
?While potentially enhancing China?s future as a global industrial power, an increasingly educated population poses daunting challenges for its leaders. With the Chinese economy downshifting in the past year to a slower growth rate, the country faces a glut of college graduates with high expectations and limited opportunities. ? China also faces formidable difficulties in dealing with widespread corruption, a sclerotic political system, severe environmental damage, inefficient state-owned monopolies and other problems.? http://goo.gl/hRJkG
BOEING 787 GROUNDED ? FT?s Robert Wright in the Page 1 splash: ?The safety crisis surrounding Boeing?s 787 Dreamliner deepened on Thursday with virtually all of the aircraft grounded after aviation regulators worldwide ordered indefinite suspensions of flights. In the U.S., the [FAA] ordered operators of the super-advanced jet to stop flying until they could prove their batteries were safe. The move ? was the regulator?s first grounding of an entire model in 34 years. ? The moves mark a considerable intensification of the storm that has been brewing around the high-profile aircraft since a fire in a battery on a Japan Airlines 787 on January 7 at Boston?s Logan Airport.? http://goo.gl/ODHK2
DEBT CEILING FLY-AROUND ?
DON?T UNDERESTIMATE CHANCE OF DEFAULT ? Qorvis? Stan Collender: ?From the conversations I've had with Republicans House members and staff since the 2012 election, the threats are real and make a great deal of political sense no matter how obnoxious and damaging it otherwise would be. ? I've repeatedly been told that, with redistricting in place, House Republicans are relatively certain they'll be able to maintain the majority at least through the end of this decade if they continue to appeal to the GOP base in their congressional districts. ?
?The GOP's base's two biggest economic issues are tax and spending cuts. Therefore, taking a hard line in all budget debates is what makes the most sense politically and makes it most likely that Republicans will be in power for years to come.? http://goo.gl/0sR1Y
MEET BOEHNER?S DIRTY DOZEN ? Fiscal Times?s Eric Pianin: ?House Speaker John Boehner has 12 GOP defectors to worry about as the debate over the debt ceiling and entitlement reform heats up. These Republican rebels all voted against reelecting Boehner for speaker and could cause problems for him down the road.? http://goo.gl/CMdch
NO WAY WE DEFAULT? ? Reuters?s Felix Salmon: ?This is one of those cases where you?re much better off listening to what officials say on the record than you are listening to what they say off the record. Treasury?s off-the-record briefings on the debt-ceiling issue are designed to be as scary as possible. But there?s no way they?ll actually follow through and default on the country?s sovereign debt.? http://goo.gl/RF0s9
ALSO FOR YOUR RADAR ?
AAPC HITS JAPAN ON YEN ? Per release from Matt Blunt, President of the American Automotive Policy Council: "Here we go again. Japan's Liberal Democratic Party is back in power and determined to repeat the 'beggar thy neighbor' policies that distort trade by cheapening the value of the yen to promote economic growth in Japan at the expense of its trading partners. ? We urge the Obama administration to make it clear to Japan that such policies are unacceptable and will be met by reciprocal measures.?
GOLDMAN TRIMS BONUSES; PROFITS RISE ? FT?s Tracy Alloway and Tom Braithwaite in New York: ?Goldman Sachs ?put the brakes on bonuses in the fourth quarter,?propelling the investment bank?s profits to their highest level in three years?and defying the tepid global economy and new regulations. The bank cut pay by 11 percent to $1.98 billion, helped by hundreds of job cuts. Remuneration as a percentage of revenues fell to 21 percent for the period, one of the lowest ratios since Goldman went public in 1999. ? Goldman?s profits almost [tripled] to $2.8 billion, thanks to lower expenses, modestly improved markets and higher asset prices that helped boost the value of the bank?s own investment portfolio.? http://goo.gl/uzMNk
** A message from CIT: Growmerica? [groh-mer-i-kuh] Definition:?Growth opportunities created when CIT finances America?s small and middle market businesses. CIT provides credit access to businesses in your communities, contributing to a stronger economy for all Americans. Our financing expertise helps suppliers keep retailers? shelves fully stocked. We?re a force in railcar and commercial aircraft leasing. In fact, we?re a steadfast partner to companies in more than 30 industries, in all 50 states, offering the lending, leasing and advisory services your constituents need to prosper. Visit?cit.com. **
Source: http://feeds.politico.com/click.phdo?i=7f26240450978bc4d70e60135a4df26a
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