EU Adopts Strict New Bank Rules
In a unanimous agreement, the 27 nations of the European Union agreed Tuesday to strict new rules for banks, intended to make them safer and eliminate the need for future bailouts, the BBC reports. All EU banks will have to hold more "top-quality capital", broadly meeting new international standards. Banks will have to hold more of the least-risky Tier 1 capital - 4.5% compared to 2% under current rules. Two new capital buffers will be introduced, including one designed to avoid "excessive lending". In addition, each member state may impose another capital buffer, depending on approval from the European Commission. The new rules will now go before the European Parliament and are expected to go take effect in June. The agreement comes amid lingering uncertainty over the euro, with fears that Spain and Italy could need bailouts and Greece may exit altogether, the BBC said.
Stockholder Support/FBI Probe
On the same day that shareholders backed JPMorgan’s embattled Chief Executive Jamie Dimon at the bank’s shareholder meeting, the FBI opened a probe into massive trading losses at the bank. The shareholders voted against a proposal to split the positions of CEO and chairman. Dimon said the bank would pursue more disciplinary action against those who were responsible for the $2 billion losses, Reuters reports. "We will do the right thing,” Dimon told reporters following the meeting. “That may well include (reclaiming some of the millions of dollars paid to the executives who oversaw the trades),” he told reporters after the annual meeting. The scandal has
Greece Faces New Elections Opposition from the anti-bailout Syriza coalition precented Greece’s political parties from forming a national unity government. New elections to be overseen by a caretaker government are expected to take place on June 17, Financial Times reports. President Karolos Papoulias was unable to form a coalition after three failed meetings with Syriza and pro-euro and center-right parties. Financial markets suffered Tuesday from the prospect of an electoral backlash against the terms of Greece’s rescue program in a second election. Greece faces deepening political instability as the second election is also unlikely to produce a clear result, putting the country’s euro membership at risk, FT said.
No Cuts, No Compromise on U.S. Debt Deal: Boehner
House Majority Leader John Boehner said Tuesday that another increase in the debt ceiling debate is a non-starter without spending cuts. Meanwhile, former President Bill Clinton said that reaching a debt deal should be the primary campaign issue in the fall national elections. Speaking at a budget conference in Washington, Boehner said, “When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase.” Speaking at the same event, Treasury Secretary Tim Geithner warned against a repeat of last summer's debt crisis, which led to the first-ever downgrade in the U.S. government's credit rating. "This commitment to meet the obligations of the nation, this commitment to protect the creditworthiness of the country is a fundamental commitment you can never call into question or violate because it's the foundation for any market economy,” he said. "This allows us to govern, to fight wars, to deal with crises, recessions, to adjust to a changing world."
China's Largest Website Posts First Quarter Loss
What a difference a year makes for Sina Corp, China's largest internet portal and media website. It posted a $15 million profit in the first quarter of 2011. This year, its net loss for the same period was $13.7 million. The loss is attributed to rising costs, mostly new hires and setting up infrastructure for its Twitter-esque microblogging site Weibo, the BBC reports. Sina makes most of its revenue from online advertising and analysts said the Chinese online advertising market has been softening. Sina’s Chief Executive Charles Chao also blamed slowing economic growth in China for its losses.