Randomly Noted

Washington has become a city where bipartisan often seems a word from a dead language. But in one important aspect of U.S. federal governance, party affiliation is happily still not a predictor of appointments.

The Wall Street Journal reported this evening that President Barack Obama will announce Tuesday his intention to nominate Ben Bernanke to continue to lead the Federal Reserve beyond the January end of his current term.

It’s a smart decision for a number of reasons. It promises continuity in the midst of a still stifling recession and continued government support for key financial institutions and markets. Most economists and market participants wanted Bernanke to stay, so an upset to the market of unknown significance and duration is avoided.

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The GM-Opel soap opera continues, and I’m going to attempt to explain why the fate of a European car maker amounts to a hill of beans in this crazy world. As WSJ colleague John Stoll reports, GM’s management is crafting a plan to raise around $4.3 billion to keep the European car business. It’s apparently one of a number of scenarios CEO Frederick “Fritz” Henderson and his team are working on following Friday’s board rejection of management’s proposed sale of Opel to the Magna consortium. It’s not at all clear that it makes financial sense for GM to keep Opel.

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The Wall Street Journal had an excellent page one story today (click here) detailing how Goldman Sachs analysts offered trading tips to the firm’s traders and key clients.

It appears that there have been some other instances of questionable research activity on Wall Street recently. Thomas Brown, who runs a hedge fund and used to be a well-known banking analyst for Donaldson Lufkin & Jenrette, wrote on his blog last week about about an underwriting by Keefe Bruyette Woods and a KBW’s analyst call. The long and short of it – a company announced it was doing a stock offering and the day of the announcement, KBW rated the stock “underperform.” KBW was a co-manager and four days after the stock was offered to the public, the analyst raised his rating to “market perform.” Read Brown’s blog item by clicking here.

The research scandal on Wall Street nearly a decade ago led to reform that was supposed to keep research separate from investment banking. Looks like some lines may be blurring again.

It makes sense that someone would dig deep back into a depression-era program to explore ways to get people spending again. Kmart and Sears have done just that by introducing a “Christmas Club” card that is like the old holiday savings programs banks sponsored.

The Kmart-Sears card allows you to save some money each week that builds toward that budget you’ve decided to set aside for holiday shopping. It’s a smart idea to budget this way. If you want to spend $500 over the holidays, it’s easier to set aside $41 a week than to take down the lump sum.

But here’s the rub.

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With the “Cash for Clunkers” auto-purchase incentive plan about to wind down tonight, some dealers are turning to good, old fashioned marketing to keep the public interested in buying new cars. Two dealers have unveiled programs they call “Cash For Cream Puffs.” Town Porsche in Englewood, N.J., is running radio ads in the New York metropolitan area offering to drop the price on a new Porsche by $4,500 if you trade in a “cream puff” – car parlance for a used car in excellent shape. And a Honda dealer in Chicago is offering top dollar for cream puffs on a trade in for a new car.

A side note regarding Cash for Clunkers – it sounds like used car dealers have suffered from the program because it hurts their supply. Cash for Clunkers cars were supposed to be turned in for scrappage. That could mean a spike up in used car prices, which could benefit new car sales if the spread between new and used tightens. And it would be good news for dealers who have cars coming off lease – it holds the residual values steady or higher, which allows dealers to make money rather than lose money as falling used car prices did earlier.