The Fed's Police Power

More details of President Obama's plan to dial up federal oversight of Wall Street continue to emerge Wednesday morning, hours before he is set to formally announce them. The Wall Street Journal and Reuters got a sneak peek at the blueprints. The juiciest change, according to Reuters and the WSJ, is to grant new policing powers to the Fed. "We propose a comprehensive review of the ways in which the structure and governance of the Federal Reserve System affect its ability to accomplish its existing and proposed functions," the document reads, according to Reuters. The news agency adds, a principal aim of the plan is to have the "Fed become a 'systemic risk' regulator to keep tabs on large firms and emerging financial threats that could hit the entire economy."

According to the WSJ, the plan would also take aim at precarious, unregulated financial products plus offer greater consumer protections for benign forms of credit. "President Barack Obama's plan will touch almost every corner of financial markets, from tougher consumer-protection policies to stricter rules over exotic financial products, such as credit derivatives," the newspaper writes.

In an effort to help the country go nuclear (in a cleaner fashion), the U.S. Energy Department is distributing $18.5 billion in loans to four domestic power utilities to finance the construction of next-generation reactors, the WSJ reports. The stakes are high. The financing agreement marks "the biggest step in three decades to revive the U.S. nuclear industry and one that could vault the utilities ahead of some of the sector's strongest players," the newspaper writes. The recipients are UniStar Nuclear Energy, NRG Energy Inc. (NRG), Scana Corp. (SCG), and Southern Co., selected from 17 firms who applied for the federal financing. These high-tech reactors are so expensive, the newspaper adds, that the firms needed preferential financing in order to begin building as the price tag ranges from $5 billion to $12 billion, too pricey for most cash-strapped utilities. The Associated Press, meanwhile, publishes a cautionary tale into mothballing older, dirtier nuclear power plants. Its investigation shows the costs to idle an old nuclear plant have soared to $4.6 billion, leaving a large percentage of nuclear plants incapable of taking them properly offline. "Federal regulators are expected to release a report later this week that will describe shortfalls at 30 of the nation's 104 nuclear plants and ask operators for details about how they plan to resolve the problem," the AP reports.

The social media universe yesterday underwent a severe realignment with the news that MySpace is slashing 30 percent of its work force, leaving it with 1,000 employees, CNN Money reports. "Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company," said MySpace Chief Executive Owen Van Natta. That's another way of saying that MySpace has got its butt kicked by Facebook and Twitter. Back in April 2008, 73 percent of the total time spent on social networks was spent on MySpace, according to a recent Nielsen study, but by April of this year, that number had dropped to 23 percent compared with nearly 66 percent for Facebook, notes the Los Angeles Times.

Saab, the venerable Swedish car brand that looked set for the General Motors (GMGMQ) scrap heap, just got a new lease of life thanks to a speciality and high-rev compatriot called Koenigsegg, the WSJ reports. The new owner—maker of supercars capable of clocking 250 mph—couldn't be more different from the swollen giant of GM. Koenigsegg employs a mere 45 staff members in a "former aircraft hanger in Angelholm, southern Sweden" and builds just four of its cars at a time. Saab, meanwhile, last year made 89,000 cars and employs 3,400 people. Saab's good fortune contrasts sharply with the fates of many U.S. auto part makers, now that the Obama administration has turned down their request for $8 billion to $10 billion in additional federal loan guarantees, CNN Money reports. Widespread bankruptcies throughout the sector would likely result, the head of the Original Equipment Suppliers Association warned.

And, finally, the cost of text messaging could be probed by the FCC for suspicious-looking, across-the-board price hikes by the nation's largest cell phone operators. According to the Los Angeles Times, Sen. Herb Kohl of Wisconsin believes "that from 2006 to 2008, the price charged by the four biggest carriers for sending and receiving such messages rose from 10 cents to 20 cents," necessitating the need for a federal investigation into possible collusionary pricing. Kohl's concerns also triggered a series of class action lawsuits against the firms. Already, the nation's biggest carriers have stormed to Capitol Hill to defend their pricing tactics. Verizon (VZ), AT&T (ATT), Sprint-Nextel Corp. (S), and T-Mobile USA were on the Hill yesterday calling the claims of price fixing "absolutely false," Dow Jones Newswire reports.