Economic Outlook: Defenders of the turf

U.S. Treasury Secretary Timothy Geithner said the strategy for pushing for regulatory reform now includes the task of keeping his own troops in line.

A turf war has developed over the formation of a new financially oriented consumer protection agency, and Geithner said in an interview Wednesday that he chastised other regulators, who have said their agencies already have the consumer's interests at heart.

Federal Reserve Chairman Ben Bernanke, Sheila Bair, chairwoman of the Federal Deposit Insurance Corp. and John Dugan, comptroller of the currency, all defended their agencies' positions as protectors of the little guy.

But Treasury officials confirmed what was first reported in the Wall Street Journal: that Geither threw a expletive-laced fit in a recent meeting over the regulators' self-serving statements that could derail a key component of President Obama's regulatory proposals.

"I have told them, 'Don't let your efforts to defend your turf add to the complexity of getting legislation done,'" Geithner said in an interview, The New York Times reported.

"I have said, 'You all have a huge amount of credibility at stake,'" Geithner said.

The overall risk, however, was that banks would seize upon the turf war, using a basic a divide-and-conquer strategy to block the formation of an agency they don't want breathing down their necks, the Times said.

Camden Fine, president and chief executive officer of the Independent Community Bankers of America, applauded the divisions. "It's entirely appropriate for the senior bank regulators, which lead independent agencies, to express different views because it makes for better policy making," he said.

On another front, Senate leaders agreed in principal to extend the "Cash for Clunkers" program, but perhaps with some rule changes.

One amendment to the the program proposed by Sen. Tom Harkin, D-Iowa, was to limit the program to individuals with incomes under $50,000 or families with incomes under $75,000, the Times reported.

Democratic leaders were confident the program, which ran through its first $1 billion in its first week, would be extended with an additional $2 billion.

The program offers federal rebates up to $4,500 for car owners who trade in old gas guzzlers for new model vehicles with improved gas mileage.

While senators debated the extension, the Department of Transportation revealed that a survey of the first week's applications showed trade ins, on average, provided participants with gas mileage improvements of 9.6 miles a gallon.

Much of the new business went to foreign carmakers like Toyota, while most of the top ten trade-ins involved American made vehicles, the department said.

The Toyota Corolla was the top car sold in the program, followed by the Ford Focus, the Honda Civic, the Toyota Prius and the Toyota Camry. On the "clunker" side of the equation, the Ford Explorer 4WD topped the list, followed by the Ford F150 Pickup, the Jeep Grand Cherokee 4WD, the Jeep Cherokee 4WD and the Dodge Caravan/Grand Caravan 2WD.

Asian markets traded mostly higher Thursday. The Nikkei 225 in Japan was up 1.32 percent. The Hang Seng index in Hong Kong was up 1.97 percent. The Singapore Straits Times fell 0.2 percent, while the S&P/ASX rose 1.45 percent.

In midday trading in Europe, the FTSE 100 in Britain rose 1.27 percent. The DAX 30 in Germany rose 0.84 percent. In France, the CAC 40 rose 1.12 percent, while the pan-European DJStoxx 600 rose 0.9 percent.