Talking up the economy, visiting the Secret Service

Good morning from The Oval. On this day in 1789, George Washington took the oath of office as the nation's first president.Today, the 44th president talks about the economy and pays tribute to the Secret Service.

In the morning, President Obama makes a statement at the White House about first-quarter economic growth numbers. In the afternoon, Obama travels to the Maryland suburbs to visit the Secret Service training facility.

The president seeks "the opportunity to thank some of the men and women who have worked so hard and made so many sacrifices to protect him and his family," says the White House schedule.

Obama also has a busy in-box. Among the items:

The Gulf of Mexico oil slick is spreading to the coasts of five states, report Rick Jervis and Brian Winter of USA TODAY.

Obama -- seeking to avoid the kinds of attacks that dogged George W. Bush after Hurricane Katrina -- is stepping up the administration's response to the environmental disaster.

The Justice Department has reportedly opened a criminal investigation into Goldman Sachs transactions.

The first lawsuits have been filed against the Arizona immigration law; USA TODAY's Kevin Johnson and Joan Biskupic look at the legal aspects of the debate. Obama eulogized civil rights leader Dorothy Height yesterday, writes USA TODAY's Mimi Hall.

The White House is enjoying the Republican turmoil in Florida, as Gov. Charlie Crist leaves the party to run for the Senate as an independent, reports John Fritze of USA TODAY. A new poll shows that most Americans want a judge for the Supreme Court, not a politician.

And it's a celebrity kind of weekend in Washington, as the town prepares for the White House Correspondents' Dinner on Saturday. Talk-show host Jay Leno and President Obama will both try their hand at political humor.

There's no fooling around here at The Oval, just straight reporting on presidential activities. Have a good day, a good weekend, and be careful out there.

Senate Republicans block finance bill debate

Republicans in the U.S. Senate garnered enough votes Monday to block debate of a financial regulation reform bill that the Obama administration believes would prevent a repeat of the 2008 financial meltdown.

The 57-41 vote failed to get the 60 supporters required to proceed on the regulatory overhaul; one Democrat, Ben Nelson of Nebraska, voted with the Republicans.

The vote will send lawmakers back to the negotiating table to hammer out a bipartisan compromise with amended legislation expected to return to the Senate floor soon.

President Barack Obama and the Democrats want to tighten the rules on banks and capital markets to prevent a repeat of the 2008 financial crisis, which led to the great recession.

Many Republicans agree with a need for new bank regulations but oppose the Democrats' Restoring American Financial Stability Act.

Among numerous stipulations, the proposed bill would provide shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation and director nominations.

And hedge funds with values in excess of $100 million US would be required to register and disclose financial data. Currently there are no such stipulations on the shadowy institutions.

Obama welcomes champion NY Yankees to White House

WASHINGTON -- President Barack Obama celebrated the world champion Yankees on Monday for their heroics and character - and bemoaned that his Chicago White Sox couldn't match New York's remarkable record of success.

In a jam-packed ceremony in the East Room that was part pep rally, the president pointed out that the last time the Yankees - winners of 27 titles - were toasted at the White House was 2001.

"It's been nine years since your last title - which must have felt like eternity for Yankee fans. I think other teams would be just fine with a spell like that. The Cubs, for example," Obama said, drawing laughs from players, coaches, members of his Cabinet and Congress and other guests. He added that his White Sox have gotten close, including a title in 2005.

The Yankees won the World Series in six games last year, defeating the Philadelphia Phillies. New York Manager Joe Girardi presented Obama with a signed Yankees' jersey with the No. 27.

The White House visit was the fifth for the Yankees core four - Derek Jeter, Mariano Rivera, Andy Pettitte and Jorge Posada - who have a handful of championship rings. They've met three presidents - Bill Clinton in the 1990s, George W. Bush in 2001 and now Obama.

Obama praised the players for their off-field work, from a scholarship that first baseman Mark Teixeira established at his high school with a $75,000 check, to catcher Posada's work on a support network for families with ailing children to shortstop Jeter's sportsmanship.

Earlier in the day, members of the team visited war wounded at Walter Reed Army Medical Center, which several players described as a sobering experience. Third baseman Alex Rodriguez, who wore his championship ring, called the servicemembers the "real heroes" and pitcher Andy Pettitte hailed their sacrifice. Pettitte said even a few Boston Red Sox fans among the wounded appreciated the Yankee visit - though they kept their Red Sox caps on.

Lawmakers turn to credit raters, prepare overhaul

WASHINGTON—Lawmakers rewriting financial regulations took aim Friday at credit rating agencies, whose analysts often gave safe ratings to risky investments that fueled the financial crisis.
Sen. Carl Levin, D-Mich., said the Senate's regulatory overhaul should go further to curb the industry's inherent conflicts of interest: The agencies are paid by the banks whose investments they rate. Banks generally want higher ratings to make the securities they offer more attractive to investors.

At a hearing Levin chaired Friday, former executives acknowledged that competition within the industry often led the agencies' analysts to rate high-risk securities as safe.

Levin suggested the co-dependent relationship between the agencies and the banks is a dangerous flaw in the financial system. He offered an analogy: "It's like one of the parties in court paying the judge's salary."

Levin was chairing a hearing of the Permanent Subcommittee on Investigations, which has been investigating the causes of the financial crisis.

The Senate next week is expected to take up a version of the financial regulatory legislation that would require only a study of the industry's conflicts of interest. A House-passed bill would go further. It would instruct the Securities and Exchange Commission to produce a policy that would either bar the conflicts or require the agencies to disclose their relationships with banks.

Levin wants the Senate bill to move closer to the House approach. He favors an expected amendment to force regulators to address the conflicts of interest.

In a report Thursday, Levin's panel said the agencies kept ratings too high in the run-up to the crisis even though they knew mortgage fraud and subprime loans were leading more homeowners to default.

Between 2002 and 2007, the top three credit rating agencies doubled their revenue, to more than $6 billion a year, the committee said. Most of that growth came from the complex investments that spread trillions of dollars in toxic debt through the financial system.

Banks pooled mortgages of varying degrees of risk and sold securities backed by the pools. The safest securities earned the highest ratings. But when most of the mortgages in a pool went bust, even the safest-rated securities became worthless.

The committee found that the rating agencies knew the investments were losing value but for months delayed downgrading individual securities. The agencies finally began responding in 2006 by downgrading some securities, the report said. The downgrades accelerated in 2007.

Obama moves to close deal on financial reform

Part rebuke, part olive branch and part sales pitch, President Barack Obama's speech Thursday exhorting bankers to "join us, instead of fighting us" on financial reform appeared to have won over some on Wall Street.

The speech was the closing argument in Obama’s two-year effort to enact regulations that would better control financial risk-taking, protect consumers and develop an orderly system of shutting down banks that become “too big to fail.” Debate on a final version of the bill could come as early as next week.

"(I) am here today because I want to urge you to join us, instead of fighting us in this effort," Obama told an audience that included some of Wall Street's top executives. Goldman Sachs CEO Lloyd Blankfein and COO Gary Cohn were there, along with top managers from Credit Suisse, Bank of America, Barclays, Morgan Stanley and JP Morgan Chase.

Sensitive export list outdated, ineffective

But the plan is likely to encounter resistance in Congress, where many lawmakers say they are worried about proliferation. While some of the reforms can be done thru executive power, a complete overhaul of the system would require legislation.

Gates said he wants Congress to pass a reform bill by the end of the year because the existing bureaucracy has alienated U.S. allies and still failed to keep sophisticated technology away from adversaries.

The "famous maxim, 'He who defends everything, defends nothing' certainly applies to export control," Gates said in a speech attended by defense contractors.

The proposal is focused on so-called dual-use technologies, items like computers and helicopter spare parts that are sold commercially for civilian purposes but also can be used by militant forces. Various federal agencies regulate these items and have competing oversight on whether they may be sold abroad.

The Obama administration's plan calls for the creation of a single list and a single licensing agency. The plan also calls for the creation of a single enforcement agency. This final step in particular was expected to require legislation.

Gates said the single list and licensing agency would allow the government to concentrate on controlling the nation's "crown jewels."