Bernanke Tells Congress That Fed Needs to Police All Banks

Remarkably, members of the House of Representatives took time from the healthcare hubbub on Wednesday to hear testimony from Federal Reserve Chairman Ben Bernanke, or at least the House Financial Services Committee did.

March 18, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user epicharmus

Remarkably, members of the House of Representatives took time from the healthcare hubbub on Wednesday to hear testimony from Federal Reserve Chairman Ben Bernanke, or at least the House Financial Services Committee did. Benanke’s main point: the Fed wants to oversee all the banks, not just the really big ones.

It’s just better that way, the central banker asserted. “The Federal Reserve’s participation in the oversight of banks of all sizes significantly improves its ability to carry out its central banking functions, including making monetary policy, lending through the discount window, and fostering financial stability,” Bernanke said.

“The Federal Reserve’s role as a supervisor of state member banks of all sizes, including community banks, offers insights about conditions and prospects across the full range of financial institutions, not just the very largest, and provides useful information about the economy and financial conditions throughout the nation,” he also argued.

Blockbuster Nearly Busted

It hasn’t been good run of years for video rental chains, with number-two Movie Gallery Inc. in Chapter 11 reorganization and now number-one Blockbuster Inc. teetering on the verge of the same–or even liquidation. On Wednesday, Fitch lowered the video chain’s issuer default rating from CCC to C, a rating close enough for the company to feel the cold fingers of default around its neck (one step away from default, in other words).

The move by Fitch came after Blockbuster said that it was experiencing “significant liquidity constraints,” and was trying to talk creditors into restructuring a lot of its debt. Otherwise, the company explained, bankruptcy might be next.

Unlike most retailers, the Blockbuster’s problems aren’t generally attributed to the recession. Instead, the likes of Netflex, Redbox and movies-on-demand have been eating the chain’s lunch and dinner too.

UBS Re-ups at Hines’ Chicago Building

It’s no secret that office markets nationwide are as sluggish as continental drift–and thus are tenants’ markets of the first order–but even so some landlords are managing to persuade major tenants to renew. Case in point: financial services firm UBS has renewed its lease for 400,000 square feet in One North Wacker Drive (otherwise known as the UBS Building, and it’s likely to stay that way) in downtown Chicago.

Considering that direct vacancies in Chicago’s CBD stood at 13.8 percent at the end of 4Q09, up from 11.4 percent a year earlier, according to U.S. Equities Realty, the renewal is a coup for building owner Hines. The UBS re-up the largest lease transaction in downtown Chicago since the fourth quarter 2009 lease of 450,000 square feet in the Sears Tower (which is rumored to have some other name) by United Airlines.

“The renewal process actually begins on the very first day of a tenant’s lease,” Tom D’Arcy, a senior vice president in Hines’ Chicago office, told CPE. “You have to shine from the start, no matter what the real estate cycle.”

Wall Street had another up day on Wednesday, with the Dow Jones Industrial Average advancing 47.69 points, or 0.45 percent. The S&P 500 gained 0.58 percent and the Nasdaq was up 0.47 percent. All three indexes are at the their highest points since roughly the beginning of the market panic in late 2008.