Obama unveils biggest financial reforms in 70 years: Economy roundup

US President Barack Obama has unveiled a suite of financial regulatory reform proposals that he says will prevent “a cascade of mistakes… over the course of decades”.

The reforms will force large financial institutions to boost their levels of capital and regulate ‘over-the-counter’ derivatives and investment securities.

The new plan will also see the Federal Reserve be given new powers to regulate “systemic risk” within the economy.

The Office of Thrift Supervision will be closed under the new plans, while the government will be given new powers to seize and unwind large, troubled companies, apart from banks.

“My administration is proposing a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression,” Obama said in a speech.

The Dow Jones fell only slightly in overnight trade as the market digested the new financial regulation plans.

Back home, the Australian share market has had a quiet morning following the slight losses on Wall Street.

The benchmark S&P/ASX200 index was down 8.6 points or 0.2% to 3895.5 at 12.20pm AEST.

The Australian dollar has also slipped back to US79c.

NAB shares have gained 1.7% to $22.10, while Westpac has also risen 1.3% to $19.85. Commonwealth Bank shares have lifted 0.9% to $38.04 as ANZ has also gained 0.1% to $16.46.

Meanwhile, the sugar growing industry group Canegrowers has said it welcomes yesterday’s decision by CSR to de-merge its sugar business into a new listed entity. Chairman Alf Cristaudo told the ABC that the decision will benefit the industry.

“For quite some time now – CSR looked to sell its sugar business back in 1999-2000 – growers have been concerned that the sugar business has [been] the ugly ducking,” he said.

“Through a long period of downturn investment, focus has been elsewhere in CSR’s business.”

CSR yesterday said that it was in the “final evaluation and due diligence” stage of its demerger, expected to be completed next year. CSR will keep the building products, aluminium and property divisions of the current operation, while a new, separate entity will handle its $1.2 billion sugar division.

Mining giant BHP Billiton has appointed Wayne Murdy, former Newmont Mining Corp chief, as a non-executive director on its board. The appointment is effective immediately, while chairman Don Argus told Business Spectator that Murdy will bring the company some valuable industry experience.

“His depth of senior management experience and knowledge of the industry will be an asset to the company,” Argus said. “He is also past chairman of the International Council of Mining and Metals, a past director of the National Mining Association and a former member of the Manufacturing Council of the US Department of Commerce.”

Overseas, the Japanese government has raised its assessment of the nation’s economy for a second consecutive month, saying the downturn has hit its bottom.

“While the economy is in a difficult situation, movements of picking up are seen in some
areas,” the Cabinet Office said in its monthly report, which was released today.