Bank of America Corp. (BAC) News

LINCOLN, Neb., Aug. 13 (UPI) -- President of the Federal Reserve Bank of Kansas City Thomas Hoenig said Friday that the Federal Reserve Bank was risking setting off a second recession.

"Monetary policy is a useful tool but it cannot solve every problem faced by the United States," said Hoenig at an open meeting in Lincoln, Neb., The New York Times reported.

"In trying to use policy as a cure-all, we will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long," he said.

At the Fed's Open Market Committee meeting Tuesday, Hoenig was the lone dissenter in a 9-1 policy vote that kept bank lending rates at zero to 0.25 percent and set up a program for the Fed to pump its earnings from its Treasury holdings -- about $10 billion per month -- back into the economy by purchasing more Treasury securities.

In Lincoln, Hoenig said, "I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth but there is no short cut."

In part, Hoenig said businesses should learn to take risks, again. The way to do that is to tighten monetary policy -- raising lending rates, which would also slow inflation, should it come barreling back in the future.

"If we again leave rates too low, too long, out of our uneasiness over the strength of the recovery and our intense desire to avoid recession at all costs, we are risking a repeat of past errors and the consequences they bring," he said.

NEW YORK, Aug. 13 (UPI) -- Media mogul Rupert Murdoch said he is working on plans to launch a news business geared toward digital devices and aimed at a young U.S. audience.

"We'll have young people reading newspapers. It's a real game changer in the presentation of news," Murdoch said, The Los Angeles Times reported Friday.

The current plan calls for the company to produce short articles for an audience on the go that uploads the broadcasts with mobile phones or digital readers.

Murdoch's News Corp. (NASDAQ:NWS) , would develop the new firm as part of the New York Post, one of News Corp's newspapers. It could also draw from various News Corp. newspapers for material, such as The Wall Street Journal.

Industry analyst Edward Atorino said media firms are looking at digital presentations as "another lifeline to survive."

The New York Times has already launched a publication that is viewed through an iPad application, which it said has been loaded onto 400,000 mobile devices. To date, revenues for the service have been based on advertising, but The New York Times is expected to initiate subscriber fees sometime in 2011.

WASHINGTON, Aug. 13 (UPI) -- The U.S. bank (NYSE:USB) deemed likely to suffer most from financial reform could endure only modest losses, an industry analyst at Bank of America (NYSE:BAC) Merrill Lynch said.

The firm in question, Goldman Sachs (NYSE:GS) , has said it derives 10 percent of its revenue from trading that will be illegal when the regulatory law takes effect, The Washington Post reported Friday.

In a recent research note, analyst Guy Moszkowski said, "Unless the market making rules turn out to be draconian, GS does not anticipate significant revenue loss from FinReg."

The bill prohibits banks from trading with their own money, a tactic known as proprietary trading and which is a big revenue source for Goldman Sachs.

Before the law takes effect, steps need to be taken, including a survey of banks to assess bank trading, after that rules need to be written that clearly delineate the difference between proprietary lending and making trades on a client's behalf, the Post said.

Last week, U.S. Sens. Carl Levin, D-Mich., and Jeff Merkley, D-Ore., sent a letter advising regulators, "The law is clear: The risky and abusive financial practices that drove our country into an economic ditch must end."

The senators urged regulators to write, "full and faithfully follow that directive."

Fellow at the Brookings Institution Douglas Elliott, a former investment banker, said the law had an "arbitrary" component to it. "The … rule requires an arbitrary decision as to when it's a type of bet we don't want them to make and when it's acceptable."