Chinese Premier Wen Jiabao yesterday warned other countries that pressuring China on currency policy amounts to protectionism and insisted that the renminbi was not undervalued.

Mr Wen said China would continue to reform its currency system. But he pushed back strongly against international pressure on the level of the exchange rate, which is becoming a major flashpoint in relations with the US.

Speaking at the end of the National People's Congress, Mr Wen added that China was still "very concerned" about the safety of its US dollar investments.

"The Chinese currency is not undervalued," Mr Wen said during his annual press conference at the closing of the annual meeting of the Chinese legislature.

"We oppose all countries engaging in mutual finger-pointing or taking strong measures to force other nations to appreciate their currencies."

Mr Wen said he understood that countries wanted to increase exports but said they should not resort to what he described as protectionism.

"What I don't understand is depreciating one's own currency, and attempting to pressure others to appreciate, for the purpose of increasing exports. In my view, that is protectionism," Mr Wen said.

WASHINGTON -- Capital is the oxygen that a small business needs to survive and thrive, yet across the country, the air's pretty thin, as business owners from coast to coast complain of huge hurdles to getting badly needed loans.

Jim Collins, co-owner with his wife Arlene of Quantum Energy Solutions, has been in business in Sacramento, Calif., since 1974. He has a $50,000 line of credit, backed by the U.S. Small Business Administration, through US Bank, owned by US Bancorp. He has a solid credit history and $30,000 in untapped credit.

Yet when Collins approached the bank about borrowing at least $500,000 to expand his 12-employee firm -- which retrofits buildings with energy efficient technologies -- he was rebuffed, told that his company lacks resources and collateral. US Bancorp declined comment.

Collins, 70, can't get the money he needs to hire five additional workers and ramp up marketing, even as the Obama administration promotes the "green jobs" of the future.

[...]

Lending across the U.S. economy contracted 7.4 percent last year, the biggest such drop since 1942, according to the Federal Deposit Insurance Corp. That means $1.5 trillion in lending evaporated last year, the Treasury Department estimates.

WASHINGTON -- The chairman of the Senate Banking Committee will unveil on Monday a proposal to revamp the nation's financial regulations that would empower shareholders to have advisory votes on executive pay and to nominate directors for the boards of public companies through company proxy ballots, several people briefed on the draft legislation said Saturday.

The shareholder provisions, which have been vigorously opposed by many corporations and by Republicans, will be part of a bill that would amount to the most sweeping overhaul of financial regulations since the Depression. In one of the most fiercely debated provisions, the bill would create a consumer financial protection agency under the umbrella of the Federal Reserve, a move certain to disappoint liberal Democrats who believe the Fed failed to safeguard consumers in the years leading up to the banking meltdown.

With no Republican support yet for the proposal, Democratic lawmakers and the White House have been gearing up for a potentially bitter partisan fight.

The impending proposal by the chairman, Christopher J. Dodd of Connecticut, hews in many ways to a proposal advanced last summer by the White House, the people briefed on the legislation said.

One fast-growing American industry has become a conspicuous beneficiary of the recession: for-profit colleges and trade schools.

At institutions that train students for careers in areas like health care, computers and food service, enrollments are soaring as people anxious about weak job prospects borrow aggressively to pay tuition that can exceed $30,000 a year.

But the profits have come at substantial taxpayer expense while often delivering dubious benefits to students, according to academics and advocates for greater oversight of financial aid. Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students.

"If these programs keep growing, you're going to wind up with more and more students who are graduating and can't find meaningful employment," said Rafael I. Pardo, a professor at Seattle University School of Law and an expert on educational finance. "They can't generate income needed to pay back their loans, and they're going to end up in financial distress."

The buzz on the Lehman bankruptcy examiner's report has focused on Repo 105, for good reason. That scheme is one powerful example of how the balance sheets of major Wall Street banks are fiction. It also shows why Congress must include real accounting reform in its financial legislation, or risk another collapse. (If you have 8 minutes to kill, here is my recent talk on the off-balance sheet problem, from the Roosevelt Institute financial conference.)

But an even more troubling section of the Lehman report is not Volume 3 on Repo 105. It is Volume 2, on Valuation. The Valuation section is 500 pages of utterly terrifying reading. It shows that, even eighteen months after Lehman's collapse, no one - not the bankruptcy examiner, not Lehman's internal valuation experts, not Ernst and Young, and certainly not the regulators - could figure out what many of Lehman's assets and liabilities were worth. It shows Lehman was too complex to do anything but fail.

The short version: Repo 105 was a transaction Lehman employed with British banks to temporarily sell the banks assets for cash, which assets would be bought back in a week or so. Lehman posted 105% of the cash in alleged asset values to their counter-party AND paid a premium interest rate. They showed these transactions on their books as final sales. These Repo 105, and later 108 transactions peaked at the time for the quarterly statements and was a pretty transparent attempt to dress up their balance sheet for the quarterly or yearly statements.

They used British banks because they could not find US banks who would give them a letter of opinion that these were final sales. People are on record that Dick Fuld, CEO of Lehman, was fully briefed and walked through these transactions and it is virtually inconceivable that Tim Giehtner, then President of the New York Fed, who had oversight responsibility for Wall Street, was unaware of these transactions. Paulson in his recent book noted that it was common knowledge in the summer of 2008 that Lehman's books were not an accurate statement of the firms value.

Loss of access to Repo 105/108 was likely the final straw bringing down Lehman in the fall of 2008, precipitating the GFC. That was the source of at least $50 billion of the hole that suddenly appeared on Lehman's balance sheet.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."