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Former Federal Reserve Chairman Paul Volcker said Thursday that more needs to be done to regulate the financial system before the lessons of the recent crisis are forgotten.

"We must not shrink away from change but accept the need for basic financial reform," said Volcker, currently chairman of President Obama’s Economic Advisory Board, in remarks to the Economic Club of New York.

He said the economy appears to be growing slowly, and that the financial crisis is beginning to seem to some like a "bad dream."

But the magnitude of the crisis showed that the underlying problems are "more fundamental" and require "broad reform" of the financial system, he warned.

The former Fed chairman said the central bank should play a key role in overseeing the financial system. Among his ideas, he said the Fed should have the power to dismantle big banks that pose a systemic risk to the economy.

"The old question (about banks) colloquially described as ‘too big to fail’ looms larger than ever," Volcker said.

In a response to recent criticism of the Fed, he said the central bank is less subject to political pressure than other regulatory bodies.

"These days, best-selling books remind us that the challenges to that structure, and particularly to the Fed’s insulation from political pressure, arise from time to time," Volcker said, referring to a popular book by Rep. Ron Paul, R-Texas.

"The sense of anger about the amount of funds required to bail out both institutions and markets is palpable," he added. "But that truly exceptional response to the financial crisis — drawing on long-dormant emergency powers — was a properly coordinated decision with the administration, not a misuse of independent authority."

The remarks came on the same day that President Obama called on Congress to tax the largest banks to ensure that U.S. taxpayers don’t lose a penny from the federal bailout of the financial, auto and insurance industries over the past year

Volcker said the proposed tax "seems to me to be a not unreasonable response." He said the banks subject to the tax have benefitted from taxpayer aid and "should carry their share of the burden."

The proposed "financial crisis responsibility fee" is aimed at large institutions that received significant federal aid during the height of the crisis, but have since recovered and are now poised to pay tens of billions of dollars in bonuses.

On Wednesday, four top bank chief executives went before a panel to answer questions about the role their institutions played in causing one of the worst financial shocks in a generation.

The CEOs of Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500) told the Financial Crisis Inquiry Commission that they made mistakes but didn’t realize how bad they were at the time. 

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U.S. Treasury Secretary Timothy Geithner said on Thursday that no financial firms should be able to escape regulation and the largest firms need a single, strong regulator.

“The regulation of the largest, most interconnected firms requires tremendous institutional capacity, clear lines of authority and single-point accountability. This is no place for regulation for council or by committee,” Geithner said in testimony to the congressional Joint Economic Committee cash advance flexible payments.

Geithner also said he expected U.S. economic growth to continue in the fourth quarter and into 2010, but America’s long-term stability and strength could not be ensured without comprehensive regulatory reform.

(Reporting by David Lawder; Editing by James Dalgleish)

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Shares of Starbucks Corp jumped 1.5 percent to $20 after the bell on Thursday as the coffee chain operator posted its quarterly results.

(Reporting by Ellis Mnyandu)

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China has quietly eased restrictions on its citizens traveling from Guangdong province to Macau, sending casino stocks soaring on Monday as industry executives bet on record October earnings in the world’s hottest gambling market.

Shares in Galaxy Entertainment and Melco International jumped around 9 percent, and SJM Holdings was up more than 6 percent, while the broader Hang Seng stock index fell 0.7 percent.

Alarmed that some Guangdong residents were gambling too much in neighboring Macau, China last year imposed new rules limiting them to two trips a year to the former Portuguese enclave.

But the authorities began easing up on the rule as early as two months ago, and noticeably loosened the restriction at the start of this month, said top executives at two of Macau’s six casino licensees, speaking on condition of anonymity due to the sensitivity of the situation.

“The latest version is (they can travel to Macau) once a month out of Guangdong,” said one of the executives. “Gaming revenues for the first two weeks of the month have been good.”

The other executive forecast that October — a high travel season for Chinese because of the October 1 Golden Week holiday — could see record monthly casino revenues, in part due to the relaxing of the visa rules.

Macau’s six casino operators include U.S. giants Las Vegas Sands and Wynn Resorts, along with home-grown players Galaxy and SJM Holdings and joint ventures Melco Crown and a casino jointly operated by MGM Mirage.

“We’re seeing repeat customers coming back more regularly than previously,” said an executive at one of the six operators insurance quotes. “It’s been occurring for two and a half months, but they probably lightened up even more since September 1.”

Macau has rocketed on to the global gambling stage in recent years following reforms earlier this decade that saw an end to a previous monopoly and awarding of licenses to multiple players, boosting competition.

The market grew 57 percent in 2007 alone, fueled by a huge influx of mainland Chinese, who now make up about 65 percent of casino visitors.

GOLDEN OCTOBER

Macau generated HK$105.6 billion ($13.5 billion) in gross gaming revenues in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period, according to a prospectus from Wynn Macau, the Macau assets of Wynn Resorts, which is preparing an IPO in Hong Kong.

But Beijing clamped down on mainland visitors to Macau in the middle of last year amid a proliferation of stories of officials illegally gambling away millions of dollars in government funds.

That clampdown, combined with the global financial crisis, sent a chill through Macau, with gaming revenue down 12.5 percent in the first half of the year.

The return of Chinese tourists and an improving economy helped Macau post record casino revenue in August. 

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MONTREAL–Bombardier may be able to avert additional layoffs beyond what have already been planned, following a 22-plane order from American Airlines valued at more than US$770 million.

AMR Corp. (NYSE: AMR) announced Thursday that its American Eagle regional subsidiary has signed a letter of intent to exercise options for the for CRJ-700 regional jets as part of a US$2.9 billion financing package.

Deliveries of the aircraft are scheduled to begin in mid-2010. Although the value is estimated based on list prices, the airline is believed to have received a healthy discount.

The airline also plans to add a first-class cabin to its existing fleet of 25 CRJ-700 aircraft.

This is the first of several orders that may materialize over the coming weeks following an intense Bombardier campaign to boost its order book to avert being forced to reduce its production of the aircraft.

Bombardier Aerospace president Guy Hachey said this week that he hopes the efforts will materialize in orders by the end of October.

Analysts said the early signs of recovery in commercial orders will be welcomed, although there remains concern about the impact on Bombardier from a decline in demand for business jets, which are sold to non-airline companies guaranteed high risk personal loans.

Bombardier is in the process of laying off 4,360 employees as it reduces production of business and commercial aircraft. Regional jets, which are sold to airlines, are estimated to account for 1,200 of the layoffs.

David Newman of National Bank Financial said the order should help to avert a further production cut for CRJs next year.

"Clearly this order, which management intimated was sorely needed to prevent further production cuts and layoffs beyond that currently planned, should provide some comfort," Newman wrote in a report.

While the order is welcome, Cameron Doerksen of Versant Partners said it doesn't change his forecast for Bombardier.

"We still believe that lower deliveries (and margins) of business jets will be the primary driver of profitability in the aerospace division through fiscal 2011," he wrote in a report.

On the Toronto Stock Exchange, Bombardier shares gained one cent at C$4.85 in morning trading.

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H&R Block Inc. said Friday that it lost $133.6 million in the first quarter, about the same as a year ago but slightly more than Wall Street expected, as acquisition expenses and other costs offset slightly higher revenue.

The nation’s largest tax preparer said its loss amounted to 40 cents per share, compared with a loss of $132 auto loans for people with bad credit.7 million, or 41 cents per share, a year ago.

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DETROIT — General Motors Corp. completed an unusually quick exit from bankruptcy protection on Friday with ambitions of making money and building cars people are eager to buy.

At a news conference, CEO Fritz Henderson said the revamped automaker will be faster and more responsive to customers than the old one. It will generate cash and repay billions in government loans ahead of a 2015 deadline.

The new company will build more cars and trucks that consumers want and launch them faster than in the past, Henderson said. GM also announced plans to experiment with auctioning new cars on eBay, expanding on an existing partnership covering certified used vehicles.

"We recognize that we’ve been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done," he said.

The new company will focus on customers, cars and culture.

"If we don’t get this right, nothing else is going to work," Henderson said at GM’s Downtown Detroit headquarters. "Business as usual is over at General Motors."

GM, in a viability plan presented to the government, said it would break even before interest and taxes next year, and be slightly above break-even for 2011 on a pretax basis.

"Sitting here today, I don’t have any reason to disbelieve those numbers," Henderson said, giving no details of when the company would make a net profit business cards online.

Henderson said the U.S. government, which owns a majority stake in GM, has vowed that it would not get involved in day-to-day decisions. GM received $19 billion to $20 billion more in federal aid on Friday, the remainder of the $50 billion in aid it will receive, he said. A large part of the money will be held in escrow.

The Treasury Department released a statement Friday crediting GM’s restructuring with saving both the automaker and "tens of thousands" of jobs.

GM makes the GMC Savana and Chevrolet Express full-size vans at its Wentzville facility. A week after GM filed for bankruptcy, it told the local work force that it would cut one of two production shifts on Aug. 10.

One shift of workers will return to work on Monday, after a nearly five-week extended shutdown. A week later, on Aug. 3, workers on both production shifts will come back to transition the plant, said Bob Wheeler, the plant communications manager. By Aug. 10, about 890 hourly workers will be laid off.

A side effect of GM’s reorganization is that about 1,100 dealerships are expected to lose their franchises.

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A major video-game company that made $111.5 million in global profits last year on popular titles such as Assassin’s Creed is getting a $263 million grant from the Ontario government to open a new studio in Toronto and create 800 jobs over a 10-year period.

The deal was announced yesterday after a three-year courtship of Ubisoft, which is based in France and employs 2,200 in Montreal.

Other games in its stable include Prince of Persia, Far Cry and the Tom Clancy titles Splinter Cell and Rainbow Six.

But Ontario taxpayers won’t get a share of the company’s profits from games developed at the new Toronto studio to open later this year, Premier Dalton McGuinty said.

"Do we get a piece of the action? No, no," the Premier said. "What we’re talking about here is an investment in jobs and in strengthening the industry as a whole.

"To begin to demand an equity stake in private-sector enterprises is a step too far," added McGuinty, who said that the equity stakes Ontario has taken in General Motors and Chrysler as a result of hefty government bailouts were something that "just kind of happened" in negotiations to save the troubled automakers.

Ubisoft will invest another $500 million in its Toronto operation, where it will draw on resources in the local film industry for production of video games.

It’s a fast-growing field that has already outpaced the movie box office tallies in the United States, for example, according to NPD Group, as the biggest players are in the 40-plus age group with healthy disposable incomes cash loans.

As traditional manufacturing industries such as automobiles decline, Ontario has been targeting the fast-growing world of digital media, which includes computer graphic imaging for the genre of animated movies.

Ubisoft becomes the province’s first major video-game company.

McGuinty called digital media "a new kind of manufacturing" that is worthy of support to build a more diversified, knowledge-based economy.

"This is an anchor investment … it will catapult us a great distance forward," the Premier said.

He noted the investment will help keep graduates of local community college computer animation and similar programs from leaving the area, which is already the third-largest digital media hub in North America.

"Rather than the brain drain … the opening of Ubisoft Toronto is all about a brain gain," said Yannis Mallet, chief executive of the company’s Montreal and Toronto operations.

Ubisoft has operations in 28 countries, including 20 studios, and sells its products in 55 nations.

"It’s a competitive world out there." McGuinty said.

"We were determined to land a video-game publisher-developer of Ubisoft’s stature."

The company, which also has small studios in Quebec City and Vancouver, will have to open its books to the province on a quarterly basis to make sure it is creating the jobs promised before receiving the $263 million in chunks over the 10-year period.

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HOUSTON–Texas billionaire R. Allen Stanford pleaded not guilty yesterday to charges he swindled investors out of $7 billion (U.S.) and a judge set bond for his release, pending trial, at $500 million.

Stanford entered his plea during arraignment here in federal court. The financier was indicted on charges that his international banking empire was really just a colossal Ponzi scheme, in which early investors were paid off with funds supplied by later investors.

Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt, three executives with now defunct Houston-based Stanford Financial Group indicted with their ex-boss, also entered not guilty pleas.

Court was told Stanford should be held without bond for trial on fraud charges. Prosecutor Paul Pelletier said investigators found a secret Swiss account Stanford controlled that was drained of more than $100 million in December 2008.

Jeffrey Ferguson, a forensic examiner hired to review the records of Stanford Financial Group and its affiliated Caribbean bank in Antigua and Barbuda, testified nearly $1.2 billion of the $7 billion the defendants are accused of bilking from investors is not accounted for.

Prosecution documents say Stanford faces a potential life sentence, has access to a private jet and an international network of wealthy acquaintances ready to help him. Dick DeGuerin, Stanford’s lawyer, objected to Pelletier characterizing the account as secret, saying it was known to Stanford’s staff. "It’s just wrong and it’s designed to prejudice potential jurors …"

DeGuerin argued Stanford is not a flight risk and highlighted his charity efforts, including his work with a foundation for single mothers in Antigua, strong ties to his children and amicable relations with the mothers of his children as examples of his strong character.

U.S. Magistrate Judge Frances Stacy set bond at $500,000, including a $100,000 cash deposit instant cash advance. Her order also requires Stanford to wear a global satellite tracking device.

Unable to post bail immediately, he was returned to jail. He has been in federal custody since his arrest in Virginia on June 18. He denies allegations he defrauded investors and even tried to surrender to federal authorities before his indictment was handed down last week.

He was returned to Texas on Tuesday and is being held in the Montgomery County Jail in Conroe, just north of Houston. He arrived at court in leg irons, handcuffs and an orange prison jumpsuit.

Each serious count that Stanford faces carries prison terms of up to 20 years. The defendants are accused of misusing most of the $7 billion they advised clients to invest in certificates of deposit from Antigua’s Stanford International Bank.

Also indicted is Leroy King, 63, the former CEO of the Caribbean state’s Financial Services Regulatory Commission. Fired on Tuesday, he was arrested by island authorities. King is accused of taking more than $100,000 in bribes to turn a blind eye to irregularities.

Anthony Armstrong, director of public prosecutions for Antigua and Barbuda, said King would be handed over once the U.S. sends documents required to extradite.

All are charged with wire fraud, mail fraud, conspiracy to commit mail, wire and securities fraud and conspiracy to commit money laundering. Stanford, Pendergest-Holt and King are also charged with conspiring to obstruct a Securities and Exchange Commission probe.

The indictment states Stanford and the others falsely claimed to have grown $1.2 billion in assets in 2001 to roughly $8.5 billion by Dec. 31, 2008. Roughly 30,000 investors had put money into the scheme.

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