Archive for Federal Reserve

Jewish lobbyists successful in adding programs to bailout bill

Posted in Media Watch with tags , on November 3, 2008 by The 800 Pound Gorilla

The Jewish Daily Forward
October 8, 2008Washington — As the $700 billion bailout package wended its way through Congress and grew from a three-page proposal to a 442–page document, Jewish groups were able to fold into the final legislation two key social service bills that otherwise might have been ignored by lawmakers.

Officially, Jewish activists refrained from taking a position on the bailout package as a whole. But behind the scenes, lobbyists for Jewish philanthropies and for service providers worked with the office of House Speaker Nancy Pelosi and with the Democratic and Republican caucuses in both chambers to make sure that some of the extra spending attached to the legislation was targeted to their causes.

According to one of the activists, who was involved in the lobbying effort and requested anonymity: “This was probably the last legislative action of this Congress. This was our last lifeline.”

The bill in its final version included two provisions lobbied for by a coalition of charities in which Jewish groups played a major part. One is the extension of the IRA charitable rollover, which allows people aged 70 and 1/2 and older to give up to $100,000 from their IRA savings account without being taxed for the sum. This provision, which expired this year, already put more than $20 million in the funds of Jewish federations and is seen as a major fundraising vehicle for the groups.

The second provision is the mental health parity effort known as the Paul Wellstone Mental Health and Addiction Equity Act. It compels health insurance providers to give the same coverage to mental health problems and addiction treatment as is currently given to physical problems. “This is part of the process of normalizing mental health treatment. It shows this is no longer something that should be swept under the rug,” said William Daroff, vice president for public policy at the United Jewish Communities, which is the group that led Jewish efforts on these legislative issues.

These two additions played well with both groups that initially opposed the bailout proposal. For conservative Republicans, the IRA rollover was seen as another way to decrease taxes. For some Democrats — and Republicans — mental health parity has been an important cause. Minnesota’s Jim Ramstad, a moderate Republican who co-chairs the House’s Addiction, Treatment and Recovery Caucus, voted for the new version of the bill because of the mental health parity provision, saying that it was among the things that “caused me to reconsider my position.”

For UJC, the past few weeks proved positive for several legislative priorities that for months have been stuck in committees.

The Emergency Food and Shelter Program, which provides short-term cash assistance to individuals in need of food and housing, was increased to $200 million, despite attempts by President Bush’s administration to cut funding. The program is administered by the Federal Emergency Management Agency and has five major charities on its board, including UJC.

Another piece of legislation approved was the extension of Supplemental Security Income benefits for refugees in the process of naturalization. Originally the program was designed to provide assistance for up to seven years, until these refugees become citizens. Yet as the processing period for naturalization has grown longer, many immigrants lost their benefits before gaining citizenship. The new legislation will extend the period for an extra two years, thus restoring benefits for some 8,000 Jewish immigrants from the former Soviet Union who have already lost their eligibility for assistance.

Other measures approved by Congress and of interest to Jewish advocacy groups promoting social justice were the update of the Americans With Disabilities Act, which broadened the scope of the existing law, and the allocation of Homeland Security funds for not-for-profit groups. In recent years, this money has become a leading source of funding security needs for Jewish institutions across the country.

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Israeli ‘Depositors won’t be harmed by crisis’

Posted in Media Watch with tags , on October 14, 2008 by The 800 Pound Gorilla

The Jerusalem Post
October 12, 2008

Following a four-day holiday, Tel Aviv stocks opened with sharp losses on Sunday, but staged a relative recovery in late trading as the Finance Ministry said it was committed to restoring the public’s confidence in the financial system.

“The government of Israel will take care of the financial system out of concern for the public and its savings. In cooperation with the Bank of Israel, we will emerge from this crisis,” Finance Minister Ronnie Bar-On said at the weekly cabinet meeting on Sunday. “We know what needs to be done, and we will do everything to stand behind the stability of the financial system. For the past 60 years, depositors have not been harmed, and they won’t be harmed now.”

While pressure heightened on the world’s leading economies over the weekend to detail specific urgent and exceptional steps to stabilize financial markets before they open on Monday, the Finance Ministry and the government are not rushing to take such steps.

Although Bar-On said that intervention in the financial markets was an option that was not being ruled out, he warned that early intervention might cause more damage rather than aid the markets and investors.

“We are still in the midst of the global financial crisis, and it’s already clear that this is a crisis of historic dimensions. However, the economic and financial reality in Israel is different. There are currently no fears of any local bank collapsing,” said Bar-On. “The financial system, especially the banking system, operated more conservatively. It barely adopted the sophisticated financial instruments that other systems are now suffering from. Our system was kept under control, through tight regulatory rules, high capital adequacy ratios, and high levels of disclosure and transparency. As a result we are in a situation in which the financial system’s level of exposure is fairly limited.”

As global stock markets embarked on their roller coaster ride last week, prompted by panic selling sweeping many markets to their steepest falls ever as investors dismissed moves by governments and central banks to calm things, pressure mounted on the reopening of the local stock exchange on Sunday after a four-day break for Yom Kippur.

Trading on the Tel Aviv Stock Exchange opened with sharp losses, as local stocks plunged over 8 percent after a delay of nearly an hour as pressure of preliminary orders pushed the Tel-Aviv 25 Index down more than 5%. Under the TASE’s “English opening” policy, if the index points to drops of more than 5% at the opening, trading is postponed for up to 45 minutes. Automatic circuit-breaker rules will activate if the index changes by more than 8% during the session. If the index falls by 12%, trading is suspended for the day.

Following the Finance Ministry’s announcement that it would stand firmly behind the financial system, the TA-25 Index cut early losses and closed down 3.8% at 767.6 points. The Tel Aviv 100 Index was down 4.6% to 683.5 points. The Tel Tech Index was down 11.8% to 150 points, and the Tel Bond 20 was up 0.3% to 199 points, recovering from a loss of over 3% earlier in the day.

“The market has reacted remarkably on the first day local investors had a chance to respond to last week’s tumbling stock markets across the globe. There was a lot of panic and hysteria ahead of the opening – all psychological in nature – and we expected sharper losses,” Yair Alek, CEO of Axioma Investment House, told The Jerusalem Post in a telephone interview. “Today is a proof that without an economic bail-out plan or other interventionist plan, the local market functioned properly, closing with modest drops.”

The TASE will close Monday for the Succot holiday and remain closed for trading until Wednesday.

“What happens in the global markets over the next few days will dictate the direction of the local market on Wednesday,” said Alek. “As international government leaders are gathering to formulate new steps in an effort to combat the credit freeze, we could see some upside on global markets, in the form of a correction.”

While the Finance Ministry and the Bank of Israel reiterated that they were not yet rushing to take direct operational steps to secure the public’s invested funds, Industry, Trade and Labor Minister Eli Yishai called upon the government on Sunday to adopt an economic rescue plan in the wake of the global market crisis and a serious loss of public confidence.

Yishai’s proposed plan includes a government safety net to insure all the public’s deposits in banks, mutual funds, provident funds, and advanced training. Yishai contends that the measure will help restore the public’s confidence in financial institutions and prevent a capital outflow that could exacerbate the liquidity crisis in the economy.

“If you look at deposit insurance around the world, you see that governments can’t meet the insurance programs. In a situation of a general crisis as there is now, it turns out that deposit insurance is never high enough and at the end of the day is just a bureaucratic plan,” said Bank of Israel Governor Prof. Stanley Fischer in an interview on Channel 10. “I have deposits in the bank, and I am not worried about them. When crises happened in recent years in Israel, the government and the Bank of Israel intervened, and people did not lose all their deposits.”

Regarding the banks, Yishai’s plan demands an increase in the banks’ capital base by at least NIS 10 billion through an issue of more share capital. This, in turn, will work to raise the public’s confidence in the banks and provide more capital for the banks’ activity – especially in credit activity – to boost economic activity.

In a move to avert future erosion of pensions and savers’ future incomes, Yishai proposed an expansion of pension funds’ mandatory investment in Consumer Price Index (CPI)-linked government bonds from the current 30% to at least 50%, which would increase investors’ confidence in pension funds.
Depositors won’t be harmed by crisis
Israeli ‘Depositors won’t be harmed by crisis’