JPMorgan loss could dominate bank overhaul debate

By MARCY GORDON

WASHINGTON – The $2 billion trading loss at JPMorgan Chase should feature prominently Wednesday when lawmakers debate how best to regulate banks big enough to bring down the broader financial system.

The House Financial Services subcommittee hearing on a key tenet of the 2010 regulatory overhaul was scheduled well before the nation’s biggest bank revealed its trading misfire last week.

Since then, news of the surprise losses at the only major bank to stay profitable during the 2008 financial crisis has renewed calls for stricter oversight of Wall Street banks.

Treasury Secretary Timothy Geithner said Tuesday that JPMorgan’s loss bolsters the case for tougher rules.

“I’m very confident that we’re going to be able to make sure those come out as tough and effective as they need to be,” Geithner said. “And I think this episode helps make the case, frankly.”

Democratic lawmakers and other proponents say the trades that led to the losses at JPMorgan would have violated the so-called Volcker Rule, which restricts banks from trading for their own profit. Regulators are working to finalize the rule, which was mandated under the 2010 law. It was named after former Federal Reserve Chairman Paul Volcker.

JPMorgan CEO Jamie Dimon has been among the most outspoken critics of the rule. He says the loss came from a hedging strategy that backfired, and not a bet with the bank’s own money.

The banks have won an exemption in the rule that Dimon notes would allow them to make such trades if they are hedging against risk.

A number of lawmakers who opposed the exemption say it encourages the kind of risk taking that endangers the broader financial system.

Regulators will determine which of the nation’s banks and financial firms are “systemically important financial institutions.” They will be subjected to a stricter level of oversight and requirements for holding capital cushions against risk.

Treasury and Federal Reserve officials will testify at the hearing about what it will mean for some firms to be tagged as “systemically important.” There is little doubt that JPMorgan will meet those criteria.

Some critics and lawmakers want to go beyond the law’s parameters by placing limits on the amount of assets those firms can hold.

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Congress moves to reauthorize Export-Import Bank

By JIM ABRAMS

WASHINGTON – Congress appeared headed toward reauthorizing the Export-Import Bank after lengthy debate over the role of the independent federal agency in supporting American exporters.

The Senate was expected to pass legislation Tuesday reauthorizing the bank for three years and raising its lending cap from the current $100 billion to $140 billion. The House passed the bill last week, and it now goes to President Barack Obama, who views the bank as critical to his goal of doubling the nation’s exports.

The bank, which provides loans and loan guarantees to facilitate foreign sales, was caught this year between two traditional Republican allies: business groups that support the bank and anti-big-government conservative groups that want to eliminate it.

Without congressional action the bank’s charter expires at the end of this month.

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US wholesale stockpiles grew 0.3 percent in March

By MARTIN CRUTSINGER

WASHINGTON – U.S. wholesalers increased their stockpiles more slowly in March after seeing less growth in sales.

The Commerce Department said Wednesday that wholesale stockpiles increased 0.3 percent in March, just one-third of the February increase. Sales in March were up 0.5 percent, about half sales gain in February.

Wholesale restocking has been growing more slowly this year than at the end of last year, contributing less to economic growth. Larger stockpiles require businesses to order more goods. That typically leads to more factory production and economic growth.

Still, the ratio of inventories to sales stayed at 1.17, a healthy level. That means it would take 1.17 months to exhaust all inventories at the March sales pace. At that pace, businesses are likely to keep restocking to meet demand.

Inventory growth is expected to stay positive this year. But the gains are not expected to be anywhere near the level seen at the end of last year.

Businesses had cut back on restocking last summer when some feared the economy was on the verge of another recession. When it became clear that it wasn’t, many companies raced to rebuild their stockpiles and keep pace with consumer demand.

The increase in wholesale inventories in March included a 0.4 percent rise in auto inventories, a 2.1 percent increase in inventories of lumber and a 0.9 percent rise in inventories of computers.

Still, consumers must keep spending for businesses to continue restocking at a healthy pace.

In the first three months of this year, the economy grew at an annual rate of 2.2 percent. It was driven by the fastest growth in consumer spending since late 2010.

Consumers spent more partly in response to strong hiring. The economy added 252,000 jobs per month on average from December through February.

But hiring slowed sharply in the past two months. Employers added just 115,000 jobs last month and only 154,000 in March.

And wages haven’t kept pace with inflation. Over the past year, average hourly pay has ticked up 1.8 percent to $23.28. Inflation has been roughly 2.7 percent. Which means the average consumer isn’t keeping up with price increases

Sluggish job growth and weak pay raises threaten to drag on consumer spending. That would weaken growth. Consumer spending accounts for 70 percent of economic activity.

Stockpiles at the wholesale level account for about 27 percent of total business inventories. Stockpiles held by retailers make up about one-third of the total. Manufacturing inventories represent about 40 percent of the total.

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The Kansas City Star, Mo., Cityscape column

By Joyce Smith, The Kansas City Star, Mo.

May 8–For more than a decade, through stints in residential real estate and as a merchandiser and director of catering for Dean & Deluca, David Anderson had planned an urban market. He hardly passed up a garage sale in his search for unusual items to outfit his future store.

Now all that planning and shopping has come together in The Opera House Coffee & Food Emporium at 500 Walnut St.

The Opera House is several businesses in one.

–Classic Rock Coffee Co., which sells an assortment of coffee and espresso drinks, protein shakes, smoothies and hot and cold tea made from premium loose-leaf tea.

–The Paleo Grill, a breakfast and lunch spot serving such items as biscuits and gravy, breakfast sandwiches, omelets, chef salads, BLTs, pork tenderloin sandwiches, sloppy joes, tacos, gyros and fried pickle chips.

–Bake Haus, which makes the baked goods for the other restaurants, including cookies, cinnamon rolls, muffins, and sticky buns.

–Opera House Catering, a caterer for corporate breakfast or lunch events.

–Wrap It, a wraps and pita shop that is scheduled to open May 16.

Those five businesses, along with parent company the Opera House, are owned by Anderson and Kyle Getz. Kathy Nelson is a minority partner.

Another business, Wines, Cheese & Chocolates, is owned by William Hunter, offers exclusive items in those categories. It also has probably one of the most exclusive tables in town, a sole spot looking out on Fifth Street.

–The Opera House also has a stage for live music on weekend afternoons.

The space is a maze of the businesses, dotted with Anderson’s garage-sale finds — old electric guitars, checkerboards, vinyl records — along with his grandfather’s collection of radios from the 1940s and ’50s and a vintage TV.

The Opera House also has a small retail area selling homemade items, including jams, honeys, pasta and other items from the City Market’s farmers market. “It’s an opportunity to advertise their business even if people don’t buy something,” Anderson said.

Quick bites

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Gail MarksJarvis: Fund on target if risks are acceptable

QUESTION: I work for a company with a 401(k). I’m 24 and investing in the T. Rowe 2055 investment fund. Am I investing the right amount and am I using the right year fund? I get a 2 percent match (of salary) from my company and I put in 3 percent of every paycheck.

–D.G.

ANSWER: The T. Rowe Price Retirement 2055 Fund, or any other so-called “target date fund” with 2055 in its name, is designed for someone your age. So theoretically your fund would be ideal for you. The number in the fund name is the year you will retire if you work to 67. Theoretically, when you look through a list of 401(k) mutual funds and find the one with the date you may retire, you have found all you need to know. But people need to understand a little more to know whether the fund is right for them.

First, if you continue to put money into this fund from every paycheck until you retire, you should never have to use any other mutual fund or pick any stock or bond. This is one-stop shopping.

But most important, you need to understand what the number in your fund tells your fund manager to do. By knowing your retirement date, the manager decides how much risk you should be taking in the stock market. So it’s critical to understand his thinking so you can be sure you really want what the fund manager will give you.

When you are 24, the manager will put almost all your money into stocks. He knows that there will be times when you will lose a lot of money in the stock market, but he figures that over 43 years you will gain a lot more than you lose, and that will get you ready to retire. As you go through life, the manager will make changes in the quantity of stocks and bonds. So the closer you get to retirement, the less risk you will take in the stock market.

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How the major US stock indexes fared on Thursday

By The Associated Press

Wall Street gnawed on a muddle of economic data and corporate earnings news Thursday, then sent stock indexes lower for a second day.

Disappointing April sales results from big retailers set the bleak tone early on. GM shares fell after the automaker said its first-quarter profit declined, mainly because of weakness in Europe.

The Dow Jones industrial average fell 61.98 points, or 0.5 percent, to 13,206.59.

The Standard & Poor’s 500 index dropped 10.74, or 0.8 percent, to 1,391.57.

The Nasdaq composite average slid 35.55, or 1.2 percent, to 3,024.30.

For the week so far:

The Dow is down 21.72 points, or 0.2 percent.

The S&P 500 is down 11.79, or 0.8 percent.

The Nasdaq is down 44.90, or 1.5 percent.

For the year to date:

The Dow is up 989.03 points, or 8.1 percent.

The S&P 500 is up 133.97, or 10.7 percent.

The Nasdaq is up 419.15, or 16.1 percent.

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Tour Neck farms May 12

By Emily Freehling, The Free Lance-Star, Fredericksburg, Va.

May 4–The agricultural heritage of the Northern Neck — everything from Angus cattle to fruits and vegetables to alpacas and wine grapes — will be on display May 12, as the Northern Neck Tourism Commission puts on the 2012 Down on the Farm tour.

The tour features seven farms — four in Westmoreland County and three in King George County — and also includes the King George Farmers Market.

The farms will be open to the public from 9 a.m. until 2 p.m. at no charge. The farmers market runs from 8 a.m. until noon at King George Elementary School.

Lisa Hull, tourism coordinator for the Northern Neck Tourism Commission, said the tour is an opportunity to see a wide variety of agricultural operations up-close, while getting back in touch with a piece of Northern Neck history.

“It’s a way to get people conscious of the agricultural heritage around us,” Hull said. “It’s a big part of who the Northern Neck is and has been in the past.”

Farms featured on the tour are:

Stratford Hall — Visitors can see Devon cattle, commercial honey production, farm animals and a sawmill.

George Washington Birthplace National Monument — Visitors can see a plant clinic, rain barrels, spinning and weaving and farm animals. Snacks will be for sale here.

Westmoreland Berry Farm — Visitors can purchase strawberry shortcake, ice cream and sundaes, take $1 wagon rides and learn about rain barrels and bees.

Ingleside Vineyards — Visitors can tour a mobile walk-through educational unit of the Northern Neck Soil & Water Conservation District, take vineyard tours and sample wines, with $5, $7 and $10 tasting options available.

Evening Skies Alpaca Farm — Visitors can learn about alpaca care, craft projects, fiber arts, spinning and weaving, Virginia Cooperative Extension activities and purchase Big Kahuna Kettle Corn.

Waterloo Farm — Visitors can see black and red Angus cattle, vintage farm equipment, land protection, conservation easements and farming best practices. Future Farmers of America will be selling hot dogs.

Friendly Cottage Farm — Visitors can see fruits, vegetables, herbs, honey bees, American Indian history, water-conservation practices, forestry exhibit and vermicomposting.

Full addresses and directions to each farm can be found at neckride.org.

While visitors can drive directly to the farms they want to visit, Bay Transit and NeckRide.org will be providing free transportation to the farms that their vehicles can access. Visitors can park at any of the following farms and ride free transportation among the others on this list during tour hours:

Stratford Hall, George Washington Birthplace, Westmoreland Berry Farm, Evening Skies Alpaca Farm.

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(c)2012 The Free Lance-Star (Fredericksburg, Va.)

Visit The Free Lance-Star (Fredericksburg, Va.) at www.fredericksburg.com/flshome

Distributed by MCT Information Services

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