Economy Hot Docs: Geithner's New Tough Bailout Rules, Consumer Confidence Slides

New Treasury Secretary Toughens Bailout Rules: In his first full day on the job, Treasury Secretary Tim Geithner announced tough new rules to limit the influence of lobbyists in the Emergency Economic Stabilization Act process. The rules for the bailout include restricting lobbyist contacts in connection with applications for or disbursements of EESA funds, ensuring that political influence does not interfere with the process, certifying to Congress that investment decisions are based on the facts of the case, and ensuring that the investment process is transparent and based on objective criteria. To ensure such transparency, the Office of Financial Stability will, among other things, publish a "detailed description of the investment review process undertaken by the regulators and OFS." In announcing the rules, Geithner said that "American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system."

Consumer Confidence Continues Downward Slide: The Consumer Confidence Index continued its downward slide in January to 37.7 from its 38.6 level in December. The index, compiled since 1967 for the Conference Board, an independent, non-profit business group, "continues to hover at all-time lows," says Lynn Franco, director of research for the group. The survey, based on a sample of 5,000 households, finds that consumers remain pessimistic on a variety of economic indicators. Those believing business conditions are bad went up to 47.9 percent in January from 45.8 percent. While those expecting business conditions to worsen in the next six months declined, it only went from 41.5 percent in December to 41.1 percent in January. The Present Situation Index, which gauges how consumers feel about the economy, declined to 29.9 from 30.2 and the Expectations Index, which measures consumer outlook for the next six months, decreased to 43 from 44.2. Franco said that "until we begin to see considerable improvement s in the Expectations Index, we can't say that the worst of times are behind us."

World Needs to Rewrite the Rules of Global Business, Finance: The Secretary General of the Organization for Economic Cooperation and Development says the current global economic crisis was caused by a series of "massive failures" that were driven by an "ever-increasing thirst for short term profit." Angel Gurria, in an assessment posted on the OECD's website, says that "to restore the trust that is fundamental to functioning markets, we need better regulation, better supervision, better corporate governance and better coordination." In making his plea, Gurria warns against the "lure of protectionism and petty nationalism" that might tempt those handling bailouts. He says that along with more regulation the world needs fair social policy and an exit plan from the "massive emergency interventions once the world economy is back on a growth path." The organization has 30 member countries including the United States and promotes democracy and economic development.

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