Ben Bernanke Heads to the Hill

Federal Reserve Chairman Ben Bernanke heads to Capitol Hill today for two days of testimony on the economy. He's expected to be on the defense, says the Wall Street Journal, knocking down claims that a lack of regulation caused the economic crisis from critics like Texas Republican Ron Paul. Paul has convinced nearly two-thirds of the House to co-sponsor a bill requiring extensive congressional audits of the Fed. Bernanke, not surprisingly, strongly opposes the proposed audit, calling it "self-defeating and dangerous."

Distressed small-business lender CIT Group (CIT) announced yesterday that it will get loans of up to $3 billion through a deal it struck with creditors to avoid bankruptcy. According to the Washington Post, the deal proves that "the financial markets are regaining the strength to address problems without government help." Still, CIT is not out of the woods just yet, says the Post: "The respite could be short-lived. Financial analysts warned that CIT still must find a replacement for its traditional reliance on funding from Wall Street. Furthermore, the new loans increase a debt load that CIT already cannot afford to repay."

The Post leads its business section with a piece on Sen. Christopher Dodd's relationship with the nation's largest financial firms. According to the article, Dodd has been "a friend" to the firms—some of his most generous donors—for nearly three decades. But these days, as chairman of the Senate banking committee, he's been on "a vocal crusade to rein in those very firms, whose excesses are widely blamed for the economic crisis." Dodd is refusing donations from banks supported by federal bailout money and has funded campaign ads that portray credit card companies as "loan sharks" and paint financial lobbyists as "crybabies." According to the article, "the powerful chairman has pushed through new limits on credit card companies and is throwing his weight behind the creation of a new agency to protect consumers, an idea bankers bitterly oppose."

Some Swiss banks are "freezing out" American clients, says the Wall Street Journal, as a result of the tug-of-war between UBS AG (UBS) and the Internal Revenue Serivce. Last week, a federal judge agreed to push back the beginning of a trial in which U.S. authorities will seek to make UBS reveal the identities of thousands of Americans who they suspect may have used the bank to evade taxes. The standoff has made some banks in Switzerland view U.S. clients as an "expensive liability." According to the paper, at least four Swiss financial-services firms have put extra protective measures in place for dealing with U.S.-based clients or have refused to accept their deposits altogether.

The New York Times leads its business section this morning with an assessment of the Obama administration's strategy to revive manufacturing. According to the article, nearly 2 million factory jobs have been lost since the recession began. Industrial production has dropped 17.3 percent—the sharpest decline during a recession since the 1930s. And still, the paper asserts that instead of a implementing formal plan to address the decline, the administration has only "pursued ad hoc initiatives"—like bailing out General Motors (GMGMQ) or promoting various green energy projects. The situation demands more than that, the article suggests: "[A]s manufacturing weakens, the country becomes ever more dependent on imports of merchandise, computers, machinery and the like—running up a trade deficit that in time could undermine the dollar and the nation's capacity to sustain so many imports."

And finally, has the Amazon (AMZN) Kindle met its match? Perhaps, thanks to a new challenge from Barnes & Noble (BKS), which announced yesterday that it will launch its own e-bookstore. The Wall Street Journal reports that Barnes & Noble is teaming up with Plastic Logic, the maker of an e-reader device expected to debut in early 2010.  The retailer says it will offer more than 700,000 titles, including more than 500,000 public domain books from Google (GOOG). One industry executive interviewed says that another player is a good thing for publishers: "With retail competition comes the ability to help mold some of the discounts, something that a one-horse race doesn't let you do."