The Fed might soon regulate the entire financial system; Obama acts on emissions.

The Fed might soon regulate the entire financial system; Obama acts on emissions.

The Fed might soon regulate the entire financial system; Obama acts on emissions.

A summary of what's in the major U.S. newspapers.
Jan. 26 2009 6:13 AM

Fed May Become Great Overseer

The Washington Postleads with word that Congress is likely to give the Federal Reserve broad new powers so that it can regulate the nation's entire financial system. The move would allow the Fed to demand information from a wide range of companies to make sure no one is taking on excessive risk that could imperil the financial system. The New York Timesleads, and the Los Angeles Timesoff-leads, with news that President Obama will direct the Environmental Protection Agency to reconsider granting permission to California and 13 other states to set auto-emissions and fuel-efficiency standards that are stricter than current federal limits. The move would represent a sharp break from the Bush administration, which had rejected states' requests for separate emissions standards.

USA Todayleads with new Pentagon figures that reveal the number of roadside bomb attacks in Afghanistan hit a record last year. The number of improvised explosive devices that exploded or were discovered increased by 45 percent, while the number of coalition troops that were killed by bombs more than doubled to 161. The Wall Street Journal leads its world-wide news box with a look at how business groups are stepping up efforts to get more tax credits into the stimulus plan, as a number of Republican leaders say they will not support the legislation as it is currently written. Obama will be heading to Capitol Hill this week to try to convince reluctant Republicans to support the measure. The LAT leads locally with a look at how there seems to be broad agreement among California lawmakers to cut $6 billion in spending to help deal with the state's massive budget shortfall.

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While a number of federal agencies currently oversee the financial industry, none of them have a complete picture of the system as a whole. This blind spot became evident last year, when it wasn't until the last minute that anyone in the government realized the effect that the collapse of American International Group would have on the economy. Now, House Financial Services Committee Chairman Barney Frank wants the Fed to be in charge of making sure the whole financial system is stable.

Although there's some talk that another agency could take on the role, it seems most experts agree there's little choice but to make the Fed responsible. That doesn't mean everyone likes the idea. There's some worry the move would concentrate too much power in one agency and could result in the Fed losing its much-cherished independence. And there's also concern that managing such a huge task could lead the Fed to take its eye off its main responsibility, which is to manage the nation's money supply.

Even though Obama won't directly order that the Bush administration rejection of separate-state standards for auto emissions be reversed, there's little doubt that the EPA will do just that after it completes a formal review process. The move would represent a defeat for the auto industry, which has vehemently fought against allowing different states to set their own rules and would have to invest heavily in new technologies to meet the stricter standards. By making the announcement so early in the new administration, "Obama is sending a signal about the importance his administration places on environmental matters," declares the LAT. But in failing to instruct the EPA immediately to grant the waiver to California, the new president is also indicating that he understands that the auto industry has concerns.

The Pentagon is planning to send 10,000 new armored vehicles to Afghanistan in order to deal with the heightened threat of roadside bombs. "We're losing the war," one military analyst tells USAT. "This shows a greater capacity on the part of the Taliban and other insurgents to cause more death, destruction and challenges to the legitimacy of the Afghan government." Indeed, as USAT mentions and the LAT notes in a front-page piece, Vice President Joe Biden yesterday warned that fighting in Afghanistan will become more intense and "there will be an uptick" in casualties.

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As the new administration prepares to send more troops into Afghanistan, the LAT and NYT remind readers that they'll be going into a complex situation in which the distrust between locals and U.S.-led forces appears to be growing every day. There was a huge outcry yesterday in Afghanistan over a U.S. operation that the American military says killed 15 militants, while Afghan officials insist 16 civilians were killed. And that's only the latest example. Earlier this month, the U.S. military said 32 Taliban insurgents were killed in a nighttime raid, while Afghans say 13 civilians had been killed.

Afghan President Hamid Karzai said that any American operations that kill civilians end up "strengthening the terrorists" and he called for greater cooperation with local security forces. But American troops aren't too eager to share much information about future actions, out of fear that it would all get back to the Taliban.

The WSJ gives big front-page play to an in-house analysis revealing that lending fell at many of the country's largest banks even after they received a huge infusion of cash courtesy of Uncle Sam. Lending at 10 of the 13 biggest beneficiaries of the Treasury Department's Troubled Asset Relief Program fell 1.4 percent in what is seen as a clear signal that the plan hasn't been effective in thawing the frozen lending markets. "It has failed," a finance professor tells the WSJ. "Basically we have dropped a huge amount of money ... and we have nothing to show for what we actually wanted to happen."

In an analysis, the NYT's David Sanger writes that Democratic leaders are quietly looking at the possibility of nationalizing some of the country's biggest banks. Of course, no one inside the new administration is even uttering nationalization in public, and they're busy discussing other alternatives. But some think it might be the only way to get American financial institutions to start lending again. While some insist that nationalization would help the United States avoid Japan's mistakes of the 1990s, any suggestion that this could happen in the United States would certainly be met with stiff resistance from many lawmakers. "We think of [nationalization]," a financial historian said, "as something foreigners do to us, not something we do."

The Lunar New Year begins today, and as happens every year, there is a mass exodus of Chinese who head to their hometowns for the festivities. But for many of the 200 million who want to travel at this time of year, getting home will be no easy feat. Simply getting a hold of a railroad ticket can take several days and an incredible amount of persistence. The railroad ticket business is "corrupt and staggeringly inefficient," reports the LAT, which notes it's nearly impossible to get a ticket through the official channels. "Chinese are ordinarily reluctant to criticize their country to foreign journalists, but on the subject of railroad tickets they quickly let loose, often interjecting profanities."

The WP's Al Kamen reports that former President George Bush received some wonderful gifts from foreign dignitaries in 2007. French President Nicolas Sarkozy gave him a statue of a horse valued at $5,000, while Turkmenistan's president gave him a rug that is worth almost $2,000. Still, no one could top King Abdullah bin Abdul Aziz al-Saud of Saudi Arabia, who gave Bush a jewelry set valued at a cool $85,000. Sadly for Bush, he can't keep anything valued at more than $335. So perhaps former Russian President Vladimir Putin was being prescient, rather than cheap, when he decided that it would be a good idea to give Bush some books of English sonnets.

While most people fight tooth-and-nail to prevent prisons from settling into their towns, many communities have discovered they like having the inmates around and are trying to prevent them from leaving at a time when many states are consolidating and closing the facilities in order to save money, reports the WSJ. It's not that they love the inmates, exactly, as much as they love the cheap labor they provide. "Oh my goodness, gracious, they are such an asset," Selectwoman Terri-Lynn Hall of Charleston, Maine, said, "they are our public-works department."

Daniel Politi has been contributing to Slate since 2004 and wrote the Today’s Papers column from 2006 to 2009. Follow him on Twitter.