With the furor over American International Group (AIG) bonuses distracting Congress and the Obama Administration, the Federal Reserve thrust itself back to the front lines on Mar. 18 with a trillion-dollar-plus campaign of shock and awe against the deepening recession. At the conclusion of its two-day policy meeting, the independent central bank—which doesn’t have to ask anyone for permission to spend money—committed itself to buying enormous quantities of asset-backed securities and debt in order to lower interest rates and revive housing, consumer lending, and small-business loans.

“With the rest of Washington moving in slow motion (and in some cases hindering the revival in capital markets), the Fed continues to move ahead aggressively,” Barclays Capital (BCS) economist Ethan Harris wrote after the announcement. Math reminder: A billion is a thousand million, and a trillion is a thousand billion. So the size of the Fed’s intervention makes the $165 million worth of bonuses to executives of AIG look puny in quantitative terms—while not, of course, diminishing their moral and political significance.

Source: BusinessWeek

AIG Considering Returning Half its Bonuses

Speaking at a Congressional hearing, AIG chief Edward Liddy said he has asked company executives to return one half of $165 million in bonuses. As outrage grows over the payouts, some Congressional members are proposing a 90% tax on the insurance giant’s bonuses as well as on all companies that have received over $5 billion in federal bail-out funds.”

Source: New York Times

U.K. and Germany Mull Tighter Bank Rules

The U.K. and Germany are both considering new rules that would significantly tighten controls over their banks, including by requiring them to set aside funds for bad economic times. The proposed rules would also give regulators more authority to examine banks’ books and even their staff capabilities.

Source: Wall Street Journal

China Policies Boost GM Sales

Spurred in part by Beijing’s tax cut on small vehicles, GM saw its sales of minivans grow by 32% in the first two months of this year. Now China plans to allocate $731 million to rural buyers of vehicles, expected to further boost GM sales in the mainland market.

Source: Bloomberg

Obama Says U.S. Economy Needs “Balance”

U.S. President Barack Obama, speaking before teachers, construction workers, and local bankers in Southern California, struck a strongly populist tone on the U.S. economy. At a town hall meeting Obama said he is “trying to bring balance back to our economy” following years when government policy and regulation have benefited only the wealthiest citizens.

Source: Washington Post

Fannie Plans Big Bonuses

Fannie Mae plans to give bonuses of at least $1 million to four key executives, saying the move is necessary to retain top staff. Rival mortgage finance company Freddie Mac also plans awards to executives. Bonuses have become a volatile political issue as clamor grows over AIG’s decision to award $165 million to its senior employees.

Source: Associated Press

Why the U.S. Is Losing Foreign Graduates

Foreign students who graduate from U.S. universities with degrees in science and engineering are increasingly leaving the U.S. to pursue job opportunities in their home countries, according to a report released on Mar. 19. The report, called “Losing the World’s Best and Brightest,” warns that “the departure of these foreign nationals could represent a significant loss for the U.S. science and engineering workforce, where these immigrants have played increasingly larger roles over the past three decades.”

Source: BusinessWeek

Sony Freezes Salaries

Stung by record losses, Japanese electronics giant Sony announced it will freeze salaries for its employees. Other Japanese tech companies including NEC, Toshiba, and Hitachi are also mulling similar moves.

Source: Reuters

IN YOUR FACE: YOUTUBE’S MISSING OPPORTUNITY

Reader Geoff W. Writes: “Linking to content that’s available in some countries and not others would cause YouTube a serious headache and potentially lead to a consumer loss.”

Tell Us: Is Google Getting Smarter About YouTube?

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