UPI NewsTrack Business

U.S. markets mixed Wednesday

NEW YORK, June 17 (UPI) -- U.S. markets closed mixed Wednesday after the Department of Labor said consumer prices fell 1.3 percent in April compared to a year ago.

The drop in prices is the largest in a 12-month span since 1950. Prices, however, rose 0.1 percent in May, indicating deflation is not in the mix at present.

Bank shares fared poorly. Bank of America dropped 3.46 percent, while Citigroup fell 4.31 percent. Wells Fargo & Co. shares dropped 5.29 percent.

By close, the Dow Jones industrial average lost 7.49 points, or 0.09 percent, to 8,497.18. The Standard & Poor's 500 lost 0.14 percent, 1.26 points, to 910.71. The Nasdaq composite index added 11.88 points, 0.66 percent, to 1,808.06.

On the New York Stock Exchange, 1,264 stocks advanced and 1,732 declined on a volume of 5.2 billion shares traded.

The benchmark 10-year U.S. Treasury bond fell 9/32 to yield 3.682 percent.

The euro rose to $1.3949, compared Tuesday's to $1.3839. Against the Japanese yen, the dollar fell to 95.63 yen, compared to Tuesday's 96.44 yen.

In Tokyo, the Nikkei average gained 87.97 points to 9,840.85, up 0.9 percent.

Banks offer feint praise for proposals

WASHINGTON, June 17 (UPI) -- The Financial Services Roundtable, a bank lobbying group in Washington, said the U.S. financial system needs effective, as opposed to more, federal regulation.

"The financial services industry does not necessarily need more regulation, but rather more effective regulation," the group said Wednesday in a quick reaction to President Barack Obama's 85-page draft proposal for a regulatory overhaul.

The Roundtable also said, "our economic recovery depends on these reforms."

"It is important to strengthen the system to protect the consumer, the industry and the economy," said Roundtable President and Chief Economic Officer Steve Bartlett, in a statement.

The group supported "systemic risk oversight authority and "orderly resolution of failing institutions," but said it opposed creation of a Consumer Financial Protection Agency, which would "separate regulation of the entity from regulation of the product."

Washington think-tank, the Brookings Institute, said the proposals were "virtually all sensible, necessary reforms," but lamented the political necessity of taking some clout out of some initiatives.

The current crisis highlighted the need for banks to increase capital cushion in the event of a downturn, the institute said in a statement.

In addition "no one would design the banking regulatory system the way it is now if they were starting from scratch," the statement said.

Eddie Bauer seeks Chapter 11, sale likely

SEATTLE, June 17 (UPI) -- Seattle-based clothing retailer Eddie Bauer filed for Chapter 11 bankruptcy Wednesday, claiming it had nearly $427 million in debt to contend with.

The Seattle Times said the filing was made in U.S. Bankruptcy in Delaware as the recession continued to squeeze the chain's outdoor clothing line.

Eddie Bauer laid off nearly 200 employees in January and reported a $44.5 million loss for the first quarter.

The Times said reports in the financial community indicated the company, which was founded in 1920, would be acquired in the near future by the private-equity firm CCMP Capital Advisors.

Bank Gov. Draghi says prepare for recovery

BERLIN, June 17 (UPI) -- Bank of Italy Gov. Mario Draghi said world economic powers should prepare exit strategies from monetary policies adapted to combat the recession.

Speaking in Berlin, Draghi said the nations should prepare for a reversal of fortunes, the Italian news agency ANSA reported Wednesday.

"Exit from overly expansionary fiscal policies to reduce public debts and exit from the current stance of monetary policies to anchor inflation expectations are essential for both price stability and financial stability," he said.

Draghi blamed "serious regulatory flaws," as a major contributor to the financial crisis that turned into a global economic slowdown, ANSA reported Wednesday.

Among the regulatory pratfalls were the 2004 decision to allow investment banks unlimited leverage and allowing highly rated firms to underwrite unsecured credit default swaps, he said.

However, he added, "only if consensus can be achieved on the cause of the crisis will there be a common view on the lessons to be learned."

Italy, he said, intends to present new regulatory "golden rules" at the Group of Eight meeting in L'Aquila, Italy, in July.