Seven And A Half Things To Know: Libor Scandal Leads To Overhaul, Finally

Martin Wheatley, Managing Director of the FSA and Chief Executive-designate of the Financial Conduct Authority, delivers a sp
Martin Wheatley, Managing Director of the FSA and Chief Executive-designate of the Financial Conduct Authority, delivers a speech at Mansion House in the City of London on September 28, 2012, that sets out the findings of his report into the structure and governance of LIBOR (The London Interbank Offered Rate). Britain's Libor interest rate needs a 'complete overhaul' in the wake of the Barclays rate-rigging scandal, the nation's finance regulator said in an eagerly-awaited review. Wheatley argued that industry body the British Bankers' Association must be stripped of its role in setting Libor, with the oversight process handed to a new group. AFP PHOTO / CARL COURT (Photo credit should read CARL COURT/AFP/GettyImages)

Mark Gongloff is off the newsletter this morning, so today's 7.5 Things are brought to you by Jillian Berman.

Thing One: It's About Time: British officials plan to crack down on the process for setting the Libor interest rate, and it’s probably about time, now that we've got a potentially multi-billion dollar scandal involving 16 banks in the U.S., U.K. and Europe. Martin Wheatley, the head of the Britain’s Financial Services Authority, is set to announce that regulators will be taking power away from the banking group that oversees the rate, with government officials taking a more hands-on role, The New York Times reports. In addition, Libor manipulation will become a criminal offense.

Though he plans to acknowledge that “The system is broken and needs a complete overhaul,” Wheatley’s 10-point plan stops short of replacing the Libor rate, according to Reuters.

It’s a good thing the system’s being replaced, because even when banks aren’t manipulating the rate intentionally, their submissions used to determine the rate are often slow to keep up with the market and don’t do a good job of tracking the risk posed by each firm, the Wall Street Journal reports.

But the British aren’t the only ones taking action; the U.S. is jumping on the prove-we’re-doing-something-about-it train as well. The U.S. may pursue criminal charges against traders in London that could result in extradition, according to Bloomberg.

Thing Two: If At First You Don't Succeed, Get Tim Geithner To Try Again: As they say, if you don’t succeed try, try again. After the Securities and Exchange Commission failed to reform rules for money market funds in the face of Wall Street opposition, Treasury Secretary Timothy Geithner is trying to get the job done. In a letter to the Financial Stability Oversight Council, Geithner outlined offered a few ways for the council to act on the issue, according to The New York Times.

Geithner’s request that the committee overhaul money market funds is based on a provision of the Dodd-Frank financial reform law, which is aimed at forcing agencies to act in response to a serious risk to the financial system, according to the Wall Street Journal.

"Four years after the instability of [money funds] contributed to the worst financial crisis since the Great Depression, with the failure of the SEC to act, the Council should now move forward with the tools provided by Congress," Geithner wrote in the letter.

Thing Three: China's Bad Economy Is Hurting Everyone: China’s bad economy is hitting everybody. That's right, even coal miners living in the heart of Appalachia are suffering thanks to a sluggish Chinese economy, which is driving down the price of steel, according to The Wall Street Journal. That means the price of the high-grade Appalachian coal used to make steel has dropped 50 percent.

But it’s not just ordinary Americans that are hurting, big companies are suffering as well. Nike’s new orders from the greater China region -- a crucial market for the company -- dropped 5 percent below what they were last year, according to the Financial Times.

Thing Four: Ben Bernanke Loves A Good Phone Chat: Ben Bernanke had to do a little bit of wheeling and dealing to get the Federal Reserve to pass that major stimulus program the Fed announced earlier this month. Even though it was clear that the economy isn’t doing so well, particularly on the issue of employment, the Fed chairman wanted support for his aggressive policy because it might outlast his term, and he made a lot of private phone calls in order to get that support, the Wall Street Journal reports.

And while Americans are living in an economy that requires an aggressive Fed move to give it a boost, it doesn't seem to be getting them down. The election and a persistent (though very sluggish) recovery are boosting Americans’ confidence, even in an economy that’s seen unemployment above 8 percent for months, according to The New York Times.

Thing Five: As Is Typical, Things In Europe Aren't That Great: Spain unveiled a drastic new budget Thursday, which aims to use a combination of tax boosts and spending cuts to slash its giant deficit. Though the plan is likely to pass the Spanish parliament, Spaniards will probably be pretty upset about it; they’ve already been protesting in the streets over current austerity measures, The New York Times reports. And as per usual, Spain isn’t the only country in Europe that’s in trouble. The eurozone likely entered a recession, according to data released Friday, writes the Wall Street Journal.

Thing Six: Government Tries To Stop Internet From Creeping On Kids: The kids aren’t alright, at least according to the Federal Trade Commission. The agency is looking to overhaul privacy rules that would prevent websites and apps from collecting data from children, including photographs and the location of their mobile devices -- moves that are currently not only creepy but also legal, The New York Times reports.

Thing Seven: Walmart World Domination: Walmart is taking over the world. Taking advantage of a boost in the working poor and retirees on a fixed income, the big-box store is planning to open 22 new stores in Japan, according to the Wall Street Journal. The expansion comes 10 years after the retailer first entered the country and had trouble winning over Japenese shoppers, who associate low prices with low quality.

Thing Seven And A Half: World's Biggest Ferris Wheel: Staten Island is about to be cool (in give or take a few years). The world’s biggest ferris wheel is coming to New York’s favorite borough and is slated to be 625-feet tall and cost about $230 million.

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Calendar Du Jour:

Economic Data:

8:30 a.m. ET: Personal Income and Spending for August

9:45 a.m. ET: Chicago PMI for September

9:55 a.m. ET: University of Michigan Consumer Sentiment Index for September

Corporate Earnings:


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Libor Scandal Timeline