Oil Traders Face New Regulation businessweek.com — The dramatic surge in oil prices — including a $16-per-barrel jump in just two days — has left Washington regulators scrambling to exert new oversight on futures trading in oil and other commodities. The U.S. regulatory agency's abrupt shift toward more rigorous oversight in the past two weeks also represents a stark example of how the pinch from high gasoline prices has changed the political landscape and made energy traders prime suspects in congressional inquiries.
OPEC "Powerless" on Price guardian.co.uk — Oil remained close to last week's record high of over $139 a barrel today as Nigeria's oil minister warned that OPEC is powerless to prevent the unprecedented volatility in the market and dismissed calls for an emergency meeting of the oil producers' cartel. OPEC refuses to pump more oil to alleviate the situation, blaming factors beyond its control, including speculation and political tension.
HUD Mortgage Policy Fed The Crisis washingtonpost.com — In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending. The agency required that Freddie Mac and Fannie Mae — two government-chartered mortgage finance firms — purchase far more "affordable" loans made to minority and low-income borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing. The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending.
Fed Official Calls for More Regulation washingtonpost.com — A top Federal Reserve official called for sweeping new steps to strengthen government oversight of the financial system, offering the most extensive set of ideas yet from the central bank for how to try to prevent a recurrence of the financial crisis of the last 10 months. Timothy F. Geithner, president of the Federal Reserve Bank of New York and a key engineer of the central bank's response to the crisis, including the rescue of Bear Stearns, said large financial institutions need more capital to guard against the risk of an economic downturn.
Bernanki: Risk of U.S. Downturn 'Diminished' news.bbc.co.uk — The U.S. economy may have avoided a major decline, Federal Reserve Chairman Ben Bernanke has said. At a bankers' conference in Massachusetts, Bernanke said the risk of a substantial downturn had "diminished over the past month or so. He added that despite a recent rise in unemployment, which last month saw its biggest jump in 20 years, a series of reductions in interests rates in the last nine months combined with tax cuts had helped to offset the risks threatening the economy. Bernanke did say, however, that rising energy prices risked pushing up inflation.
Unemployment Pain to Continue money.cnn.com — Unemployment is likely to continue to rise as companies cut more jobs, according to a new index from the Conference Board's Employment Trends Index, which uses eight widely followed readings on employment and economic activity from both government and industry sources. The Conference Board said the decline in the index's May reading suggests that the labor market hasn't yet hit bottom. The organization has computed the index readings back 35 years and found that it accurately predicts all turns in the labor market accurately during that period.
By Chris Laird 
