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GAO Asked to Study Costs of Financial Crisis


For more than a year, Republicans have been hammering Democrats for what they say are the hefty economic costs of new financial regulations.

Now Sen. Tim Johnson (D-S.D.) is turning the tables on the GOP by requesting a non-partisan analysis of the total economic costs of the financial crisis that spurred the new regulatory push.

Johnson, who chairs the Senate Banking Committee, asked the Government Accountability Office to conduct an analysis of the impact of mass unemployment and its effects, the destruction of household wealth, and the effects on state and local governments, among other issues.

"We must not forget that our economy suffered from inadequate regulations that contributed to the worst financial crisis since the Great Depression," Johnson wrote in a letter to the GAO. "American families and small businesses bore tremendous costs in lost jobs, homes and savings."

Johnson also asked the GAO to consider any benefits of the U.S. government's emergency actions to stabilize the financial system, as well as any benefits in terms of financial stability that resulted from the enactment of the Dodd-Frank Wall Street Reform Act.

 

Morgan Takes Risk Off, Shifts to Safe Havens

Calling the odds of a recession in the U.S. and beyond "uncomfortably high," Morgan Stanley Smith Barney has shifted to an overweight position in safe haven assets and is underweighting risk assets. The change is "the most significant change to our tactical asset allocation in more than two years," Morgan Stanley Chief Investment Officer Jeff Applegate and two colleagues wrote in a November markets report.

The allocation change increases the firm's weighting in global cash, bonds and managed futures, while decreasing exposure to global equities, commodities and real estate investment trusts.

The report pegs a "combination of policy inaction and ineptness in the U.S. and Europe" as the primary cause of recent distress in financial markets. More distress in financial markets likely lies ahead, according to the authors.

The Economic Cycle Research Institute has also warned the U.S. is headed toward recession. "The ECRI has successfully called each of the last four recessions," according to Morgan Stanley's report.

 

Pru Website Puts Focus On Guaranteed Income

Prudential Retirement has launched a website dedicated to assisting plan sponsors and advisers help Americans put aside the money they'll need for retirement and guarantee a sustainable source of income throughout its duration.

The site, www.incomechallenges.com, provides plan consultants, advisers, and sponsors multimedia content across a broad range of retirement income topics.

"The goal of our website is to help the intermediary community view Prudential's income solutions as a way to help individuals take charge and address their personal challenges," said Srinivas Reddy, senior vice president of institutional income at Prudential Retirement.