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Former Attorney General of Ohio, Richard Cordray, is nominated to head the Consumer Financial Protection Bureau. Cordray was the first attorney general to file a lawsuit against a loan servicer for violation of state consumer laws. He also sued Merrill Lynch, Ally Financial, AIG and credit rating firms for actions relating to the mortgage financial crisis of 2008. He was editor in chief of the University of Chicago Law Review and clerked for U.S. Supreme Court Justices Byron White and Anthony Kennedy. He is a graduate of Michigan State University, Oxford University and the University of Chicago Law School. He is also a five time champion in 1987 on the quiz show Jeopardy.

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Productivity as measured by GDP per hour worked was $44 in Italy in 2009. It has remained the same as in 1999. In the EU-15 (first 15 members of the EU) the GDP per hour worked increased from 47.9 in 1999 to 49.0 in 2009. For the U.S. this GDP in the same period went up from $56.0 to $58.0. This shows the lack of productivity growth in Italy. With the current focus on Italy's slow economic growth efforts are underway to make changes that would increase growth. GDP growth in Italy was 1.3% in 2010, compared to 1.8% for the eurozone, according to Eurostat. Italy's Minister for Public Administration Renato Brunetta says he would like to cut that gap in half. Some of the measures in the recently passed $40 billion spending cuts package, include efforts to help the underdeveloped southern region. This includes cutting red tape for real estate developers, and streamlining accounting for business. Italy's growth comes mainly from exports that make up about one fourth of GDP. But this comes from lower tech sectors such as textiles, chemicals and machinery, where it must compete with China and other countries. In May 2011 industrial output was up by 1.8% in Italy,compared to 7.5% for Germany. Another problem is the large and inefficient public sector and the gap between protected state workers and a younger generation- with one in three Italians 15-24 unemployed....

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The former Attorney General of Ohio, Richard Cordray, was nominated to head the U.S. Consumer Financial Protection Bureau. Cordray is the current head of enforcement at the new agency. The CFPB is part of the overhaul in regulation of the financial industry mandated by the Dodd-Frank legislation. This agency has the authority to write new consumer protection rules, see that federal consumer financial protection laws are enforced, dispatch examiners to review bank accounting and records and look into consumer complaints. The new Bureau's rules can only be overturned by a super majority in the Financial Stability oversight Council, which is headed by the Treasury department, or by appeal to the courts.

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Rebekah Brooks, the former chief executive of Rupert Murdoch's British newspapers, was arrested on July 17, 2011. Sir Paul Stephenson, head of Scotland Yard resigned the same day. Stephenson says he did not reveal information to No. 10 Downing Street that Wallis, a former top editor of News World, was also on Scotland Yard's payroll as a special advisor. Stephenson said: " I did not want to compromise the prime minister in any way by revealing or discussing a potential suspect who clearly had a close relationship with Mr. Coulson." Britain's prime minister Cameron hired Coulson from News World as his communications advisor.

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Krugman on the failure of the Obama administration to take steps to help homeowners in the foreclosure crisis. The serious problems created in housing markets by a wave of foreclosures and declining prices. The failure of regulatory agencies to take necessary action that would reduce the wave of foreclosures. The impact this has in hampering an economic recovery.

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JP Morgan and Citicorp announced profits of $5.4 billion and $3.3 billion respectively in the second quarter of 2011. Christopher Whalen points to one area of serious risk on bank balance sheets, which is second liens or home equity lines of credit. FDIC data show U.S. banks holding $624 billion in second lien loans in the 1st quarter 2011. Core Logic data shows 11 million of the U.S. mortgaged properties - or 23% of all properties- being underwater in March 2011. Of this 4.5 million properties carry home equity loans. The average amount of negative equity for borrowers was $65,000. Whalen says the largest banks are pretending that the second liens are good because interest payments are being made. Borrowers pay only the interest for ten years on many of these home equity lines of credit. He says banks have written off $500 billion so far in assets related to housing, but this has not included much in the way of writing down second liens. If housing prices do not stabilize banks will need to make writedowns of first and second liens. Whalen says this loss is probably as large as the $500 billion already charged off by the banks. For the 1st quarter of 2011, the second liens were $136 billion for Bank of America, and it has written down $6.8 billion in 2010, Wells Fargo had $108 billion, and it had written down $4.7 billion in 2010. J.P. Morgan had $60 billion aso of the 2nd quarter of 2011. JP Morgan spokesman said the bank charged off $3.44 billion in 2010, and $1.3 billion in the first half 2011. Citibank had $46 billon in March 2010....

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Simon Nixon says the main problem with the E.U. bank stress tests of 2011 is that it did not test for sovereign defaults. For example Greek debt that is trading at 50 cents on the euro, was marked down 15%. And the lack of urgency to raise fresh capital is another problem. He says the real value of the tests comes from the asset disclosures that accompanied the tests.

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As only 8 out of 90 banks fail in E.U. stress tests, there is considerable skepticism about the rigor of the stress tests in July 2011. All the banks are relatively smaller banks, with five in Spain, two in Greece and one in Austria. The failed banks have a total capital shortage of 2.5 billion euros. Analysts had expected over 20 banks to fail and requiring tens of billions of euros of capital injections. The 2010 tests had experienced the same criticism, with seven lenders failing and a capital deficit of 3.5 billion euros. European Banking Authority officials concede the lack of sufficient rigor in the tests and attribute this to conflicting political pressures from regulators and banks. EBA officials say their main usefulness is in the added transparency and information it brings. In the 2010 stress tests each bank had to show 149 pieces of data. In the 2011 tests this went up to 3200 points of data about exposures from government debt to derivatives. EBA Chairman Andrea Enria put it this way: "There is this perception that there are things hidden under the carpet, this will help the market to make up its own mind." About 1000 pages of documents were released by EBA to analysts, investment bankers, and investors after the tests....

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Efforts by the Obama administration to persuade the credit ratings agencies not to downgrade the credit ratings on U.S. Treasury securities. As deficit reduction talks stalled in July 2011 credit ratings agencies considered a downgrade. John Chambers of S&P says political leaders must agree to reduce the deficit by $4 trillion over 10 years to be sure there will be no downgrade. Cuts less than that could lead to a downgrade, according to S&P.