Fed's No. 2 resigning; Obama must fill 3 of 7 seats on board
Advertiser News Services
WASHINGTON — Federal Reserve Vice Chairman Donald Kohn's decision to step down at the end of June gives President Obama a chance to put a bigger imprint on the central bank.
Kohn, the Fed's second-highest ranking official, has played a major role in shaping the Fed's strategy in fighting the worst financial and economic crises to hit the country since the Great Depression.
His departure will open up a third seat on the seven-member Federal Reserve board in Washington. Board members are picked by the president and must be confirmed by the Senate.
The president will have a delicate task before him. He will need to pick candidates who appeal to Democrats and aren't objectionable to Republicans. All this in an election year, where many Americans are upset with Obama about Wall Street bailouts, high unemployment and rising home foreclosures.
AIG SELLING OPERATIONS IN ASIA TO BRITISH PRUDENTIAL
NEW YORK — American International Group Inc. is selling a cornerstone of its business, Asia-based life insurer AIA Group, in a government-approved $35.5 billion deal.
The sale to British insurer Prudential PLC could reduce by nearly one-fifth the amount of federal bailout money still invested in struggling AIG.
But officials and analysts say it's not clear whether taxpayers will eventually recoup all the money AIG drew from a $182.5 billion rescue package the government committed to at the height of the 2008 credit crisis. In return, the government got a nearly 80 percent stake in the insurer.
ECONOMY GROWS MODESTLY; RECOVERY REMAINS FRAGILE
NEW YORK — Mixed reports on manufacturing, construction and personal income and spending made clear that the economy is enjoying modest growth even though the recovery remains fragile.
Manufacturing output expanded in February for a seventh straight month. Factory output has provided one of the few areas of strength for the economy.
Still, the growth in manufacturing activity slowed compared with January and fell short of economists' expectations.
In addition, construction spending fell for a third straight month in January. And though personal spending rose slightly more than expected, Americans' incomes scarcely budged. In part, that was because Social Security recipients didn't get their usual cost-of-living boost.