The Obama Administration on Mar. 25 issued details on proposed legislation for a “resolution authority” that would give the U.S. Treasury sweeping powers to dismantle or reorganize failing companies that pose a threat to the country’s financial system. The proposal would also effectively shift some authority now held by the judiciary to the executive branch in an effort to speed up what could otherwise be slow-moving bankruptcy proceedings.

The Federal Deposit Insurance Corp. already has powers to intervene and wind-down faltering banks. But as it now stands, non-bank financial firms in distress only have two options: secure a capital infusion from the government (as AIG did) or file for bankruptcy (as Lehman Brothers did). “Our plan will give the government the tools to limit the risk-taking at firms that could set off cascading damage,” said U.S. Treasury Secretary Timothy Geithner in a speech Wednesday at the Council on Foreign Relations in New York.

Source: BusinessWeek, Wall Street Journal

House Pares Back Obama Budget

The battle lines are being drawn in Congress over President Barack Obama’s budget proposal. On Mar. 25, Democrats in the lower house unveiled a $3.45 billion budget plan for fiscal 2010—$100 billion less than what the President asked for. Under the House plan, the budget deficit would rise to $1.2 trillion next year (rather than the $1.4 trillion contemplated under the Obama budget), and fall to just under $600 billion over the following five years.

Source: Washington Post

Signs of Life in the U.S. Economy

Demand for machinery and other big-ticket items rose 3.4% in February, the U.S. Commerce Dept. reported on Mar. 25. The betting among economists had been that the number would be negative. Meanwhile, a separate Commerce Dept. report showed that sales of newly built single-family homes rose at their fastest pace in 10 months in February. The data are the latest signs that the U.S. recession may be bottoming out.

Source: Reuters

Obama to Meet Bank Execs

U.S. President Barack Obama will meet with top bank chief executives on Mar. 27, including those from JPMorgan, Goldman Sachs, and Citigroup, according to two sources familiar with the matter. The meeting is expected to focus on concerns that financial firms have raised about the restrictions attached to government aid.

Source: Reuters

PetroChina Records First Profit Drop Since 2001

PetroChina — the world’s second-largest company by market capitalization — on Mar. 25 recorded its first drop in full-year profits since 2001 after due to slumping oil prices and widening refining losses. The company’s net income fell 22% to $16.7 billion, the Beijing-based company said in a statement.

Source: Bloomberg

Japan’s Exports/Imports Fall

Japan posted another record drop in exports in February, highlighting the damaging impact of the global downturn on the world’s second largest economy. Exacerbating problems, the country’s February imports also fell much more than expected.

Source: Financial Times

Morgan Stanley to Combine Forces with Japan’s Mitsubishi UFJ Financial Group

Japan’s Mitsubishi UFJ Financial Group is expected to combine its brokerage firm unit with Morgan Stanley’s Japanese operations, according to a person familiar with the matter. The merger announcement between unlisted Mitsubishi UFJ Securities and Morgan Stanley Japan could be made as early as this week, with MUFJ expected to take a 60% stake in the venture.

Source: Wall Street Journal

IMF Unveils Reforms to Combat Economic Crisis

The International Monetary Fund on Mar. 24 unveiled reforms to become more effective in combating the global economic crisis. The central point of the reforms is a new line of credit that gives countries with well-managed economies the ability to borrow more money, faster, and with no strings attached. The fund also has doubled limits on the amount of money countries may receive through some of its other programs.

Source: Washington Post

Congress Cuts Obama’s Budget

U.S. Democratic politicians on Mar. 24 announced major cuts to President Barack Obama’s first budget plan in order to bring skyrocketing annual deficits under control. Under the proposals, Democrats plan to cut hundreds of billions of dollars from Obama’s spending request over the next five years. They also want to eliminate Obama’s plan to devote more cash to the financial sector bailout.

Source: New York Times

Dell Struggles With Smartphone Plans

Maybe now is not such a good time for Dell to launch a smartphone. Instead, the technology giant might want to introduce a different kind of handheld known as a mobile Internet device, or MID. These machines are larger and more powerful than smartphones, yet they’re far smaller and of lighter weight than even the tiniest notebook computers known as netbooks.

Source: BusinessWeek

HSBC Cuts 1,200 Jobs

HSBC Holdings, Europe’s biggest bank by market capitalization, will cut about 1,200 jobs in Britain in response to the “challenging” economic environment. The jobs will be eliminated over the next 12 months in processing and operations, and some administration sites may be closed, according to a spokesperson.

Source: Bloomberg

The Rise of the Jumbo Loan

It soon might become easier again to buy a house worth $1 million or more. That’s because, despite the bruising that the luxury home market has taken over the past 12 months, rates for jumbo mortgages in the U.S. could finally fall to more affordable levels.

Source: BusinessWeek

Conversation of the Day: Tata’s Nano and Detroit

Reader Shaan Writes: “If Tata succeeds in making Jaguar and Land Rover more profitable, it will be more of an achievement than the success of Nano.”

Tell Us: Impressed by Tata’s Nano Technology?

Hot Topic on the Business Exchange: Bailout

Henry Blodget and others are sharing their insights on the U.S. government bailout of the domestic banking sector.

Join the Exchange