New York, NY, United States (AHN) – The Federal Housing Finance Agency (FHFA) is set to sue a dozen banks over risky mortgage-backed securities they sold and that lost value during the housing collapse, according to reports from the Wall Street Journal and the New York Times. The suit alleges the banks misrepresented the securities’ quality and stability.

The suits from the FHFA, which oversees mortgage buyers Freddie Mac and Fannie Mae, are expected to be filed within days.

Reports say the securities named in the suit are those sold and backed by risky and subprime loans, but classified as safe by rating agencies.

Banks said to be targeted include Bank of America, JP Morgan Chase, Deutsche Bank and Goldman Sachs.

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Washington, D.C., United States (AHN) – The International Monetary Fund is considering only two candidates to replace resigned Managing Director Dominique Strauss-Kahn.

The shortlisted candidates are French Finance Minister Christine Lagarde and Mexican Central Bank Governor Agustin Carstens.

Lagarde, the frontrunner, has been making the rounds of developing nations such as India and China in a bid to convince them to vote in her favor. On Monday, it was Carstens’ turn to lobby.

Carstens warned Washington that if Lagarde would be appointed as IMF chief, the fund could face a conflict of interest.

The central bank governor said at a speech before the Peterson Institute for International Economics that the IMF would be perceived as protecting the interests only of European if the fund still lives by a six-decade old backroom agreement that the top IMF post to a European and the leadership of the World Bank to an American.

Carstens told the audience – which includes IMF board members, U.S. government officials and known economists – that the IMF has to work harder to maintain its credibility with developing nations. He said making a European the IMF’s head at this point would create doubt among emerging economies because Europe is apparently weak in overseeing the economies of its member-nations.

He cited as proof the recent IMF loans to Greece, Ireland and Portugal, which were the largest in the fund’s history. This situation, he added, is an indicator that Europeans continue to dominate the IMF, which would be worsened with Lagarde’s appointment as replacement for Strauss-Kahn, who is battling sexual assault charges in New York.

Carstens acknowledged that Lagarde’s chances of clinching the top IMF post are high. He said what his candidacy provides is an option for developing economies to have more say in international bodies such as the IMF.

With the shortlisting of the two, the IMF executive board will soon meet Carstens and Lagarde in Washington, discuss the strengths of two and announce the new IMF managing director by June 30.

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Dhaka, Bangladesh (AHN) – Bangladesh, the world’s poorest Muslim majority country, unveiled a $22 billion deficit budget high on defense expenditures and low in farm spending. The government projects revenue income at $16.01 billion in the coming fiscal year, up from nearly $13 billion. The budget was placed in Parliament on Thursday amidst a boycott by the main opposition Bangladesh Nationalists Party.

The overall agriculture budget decreased more than 12 percent while defense spending increased almost 29 percent, the largest rise among major sectors. Instead of investing in human development and infrastructure, money will go towards increasing Bangladesh’s military firepower and salaries of defense personnel.

Finance Minister Abul Maal Abdul Muhith has called for higher allocation in the energy and farming sectors to perk up economic growth. In a move to end a serious of power outage, the power production saw an increase of almost 20 percent as the finance minister outlined a plan to increase power generation by almost three times adding 7,800 megawatts to the national grid by 2013.

The minister set a 7.0 percent growth target for the gross domestic product (GDP) starting on July 1.

The budget holds down the rising inflation, principally blamed on price spirals and depreciation of the local currency, he explained.

Economic think-tank Unnayan Onneshan, in a quick assessment on Thursday said the government might face extraordinary challenge to reach the growth target as quoted in the budget document of fiscal 20111-12 due to lack of supporting base in the overall economy of Bangladesh.

The fiscal space squeeze and IMF condition for accessing one billion dollar loan to Bangladesh might also pave the way for increasing different type of inequality; such as geographical inequality, income inequality and social inequality in the country, the think-tank said.

Finance Minister almost echoed with the think-tank and said that the next fiscal year would be challenging for the economy. “Recovery from the recession and political instability pose a great risk for the economy and we’re going to form a taskforce to deal with it,” he told journalist on Friday.

He does not hesitate to blame that the economy has fallen into trouble after recovery from recession due to commodity crisis and in Bangladesh political stability rubs salt to the injuries.

The anti-tobacco lobby expressed mixed reaction, when the government increased tax to 42.5 percent to discourage smoking. The activists were expecting strict economic restrictions of the tobacco growers.

Bank stocks went up Wednesday and Thursday riding largely on report that corporate tax will go down to 40 percent for commercial banks.

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Almaty, Kazakhstan (AHN) – The Kazakhstan candidate for the vacant position of managing director at the International Monetary Fund may soon back out of the race.

The reason National Bank of Kazakhstan head Grigon Marchenko cited is the lopsided battle in favor of French Finance Minister Christine Lagarde.

Lagarde is the top favorite to replace former IMF chief Dominique Strauss-Kahn. She has the backing of the majority of European nations and possibly the U.S. too to maintain a five-decade old gentleman’s agreement that a European hold the top IMF job and an American the top job at World Bank.

The banker pointed to Strauss-Kahn’s bid to run for the presidency in France as the time that G8 members decided to back Lagarde, whose appointment to the top IMF post is considered almost a done deal.

Marchenko opined that G8 countries – which control over 60 percent of the IMF board votes – have decided to support Lagarde even before Strauss-Kahn was forced to resign over a sexual assault charge filed last month by a hotel maid.

Marchenko, an economist who studied at Georgetown University in the U.S., said despite the lopsided race, the Kazakh government would still pursue consultations with other countries over his nomination. The nomination process ends June 10.

Lagarde, to further improve her chance of replacing Strauss-Kahn, even courted the votes of emerging economies such as India and China to weaken the European versus developing countries’ war for the top IMF post.

The battle to replace Strauss-Kahn had practically been reduced to a choice between Lagarde and Mexican Central Bank Governor Agustin Carstens, who is seen as the representative of emerging and developing economies.

Former Soviet Commonwealth of Independent States representatives picked Marchenkko as their candidate in a meeting held in May. They selected someone from Kazakhstan because the former Soviet union member is perceived as a neutral nation on account of its geographical location, which is between Russia and China.

Although the attention of the finance community is on the IMF selection process, reports surfaced on Thursday that U.S. Secretary of State Hillary Clinton is being considered to be the next president of the World Bank.

The present World Bank President Robert Zoellick’s term will end middle of next year. His replacement must secure the approval by 187 member countries of the World Bank.

Clinton’s staff denied the report that the secretary allegedly talked with White House over plans to quit her post for the World Bank job.

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