Small Banks Flex Muscles

While a few of the nation's big banks have taken most of the blame for the economic crisis, plans to overhaul the financial industry may depend on thousands of small banks, the Washington Post reports. Each of the 8,000 U.S. community banks may be small on its own, but together they represent a "powerful lobbying force" with something that the "sullied banks of Wall Street" lack—a good reputation. "The larger financial institutions have the opposite of political clout today. They're radioactive," Rep. Barney Frank of Massachusetts told the paper, "The only way the big banks can win is if they get the community banks to be their troops." So far, small banks have spoken out mostly in opposition to new regulations. Community bankers are quick to point out that they didn't cause the current crisis, though they've been told by those in favor of more regulations that the new rules aren't "aimed at them" but at the larger firms whose risky practices helped bring about the meltdown.

The Wall Street Journal leads this morning with the news that the Commodity Futures Trading Commission is planning to issue a report next month discussing the "significant role" that speculators played in driving "wild swings" in oil prices. This position is a reversal of what the regulator said last year when it blamed the oil-price swings largely on supply and demand in a report that one CFTC commissioner now says was based on "deeply flawed data." The new review is a sign of shifting political winds, the Journal says. Now under an Obama-appointed chairman, the CFTC is "widely expected to adopt new rules to limit the amount of investments in commodities by big institutions betting on their direction purely for financial gain."

The self-proclaimed "rock-star television executive," Ben Silverman, who attempted to revitalize NBC's prime-time schedule, has stepped down as co-chairman, the New York Times reports. Silverman is moving on to work with media and Internet mogul Barry Diller on a new venture. Meanwhile, NBC will promote Jeff Gaspin, who has overseen NBC's lineup of cable channels, like USA, Bravo, CNBC, and MSNBC, among other responsibilities, to run the prime-time schedule. According to today's L.A. Times, the changeover marks the end of a failed experiment: "In the end, NBC Universal Chief Executive Jeff Zucker's big gamble to hand over the keys to NBC's storied legacy to an aggressive young television producer who vowed to revolutionize the network backfired."

Sales of new homes in the United States posted their largest monthly gain in nearly eight years in June, according to the New York Times. The figures, released by the Commerce Department, suggest that the housing market may finally be bottoming out. Sales of new single-family homes rose 11 percent in June, 8 percent more than economists had expected. The pace of home sales reached its highest level since November. Still, sales of new homes were down 21 percent from June of last year. "These are still really bad numbers," an economist at IHS Global Insight, Patrick Newport, told the paper. "The market just couldn't have dropped much further."

The Wall Street Journal reports that, according to a document filed yesterday with the SEC, earlier this month, Time Warner (TWX) bought back the 5 percent stake that Google (GOOG) owned in AOL for $283 million earlier this month. According to Bloomberg, Google bought the 5 percent stake in AOL for $1 billion in 2005. "The filing marks the latest step in the separation of Time Warner and AOL, which were joined in a $100 billion merger in 2001 that has since been blamed for the loss of billions of dollars in shareholder value," the Journal says, "The independent company will be called AOL Inc. and will be traded on the New York Stock Exchange under the symbol AOL, according to the filing."

And finally, the Washington Post reports that Chinese officials heard "reassuring" words yesterday on day one of the U.S.-China talks taking place in D.C. this week. They were told that the dollar is still sound and that their investments in the United States are safe. Beijing is the largest single investor in U.S. Treasury bonds, so its stake has been "critical" to Obama's efforts to improve the U.S. economy through deficit spending. Chinese State Councilor Dai Bingguo, who oversees foreign policy, noted that the economic crisis has overshadowed some of the substantial differences between the two countries and highlighted that "we are actually all in the same big boat that has been hit by fierce wind and huge waves."