- Commentary -

September 15, 2009 (FinancialWire) (By Philip Holmes) — Stocks ended higher on Monday in the first trading session since news hit that the U.S. was going to slap a higher tariff on Chinese tires. The president also made a major speech calling for a tightening of financial industry regulation. Goodyear (NYSE: GT) ended up, as expected, but so did Bank of America (NYSE: BAC). Go figure.

The Dow Jones industrial average gained 21.39 points on the trading day, to end at 9,626.80. The Standard & Poor’s 500-stock index rose 6.61 points, to 1,049.34, while the Nasdaq composite index ended up 10.88 points, at 2,091.78.

Is a trade war with China on the horizon? Free traders balked at the Obama administration’s plan to up the U.S. tariff on Chinese-made tires to 35%, (up from a 4% tariff on all imported tires). So did Beijing.

Many wonder how much the move will help. U.S. tire manufacturers already import a lot of tires from China, after having made considerable investments in plants and equipment in the country. U.S. consumers will surely get shafted with higher tire prices.

BusinessWeek reported over the weekend on the U.S. rationale for the move: According to the U.S. trade representative’s office, four U.S. tire plants closed in 2006 and 2007. Three more are set to close in 2009. Meanwhile, imports of tires from China have increased by more than 300%. 

President Obama was also irritating bankers on Monday, with renewed call for an overhaul of regulations governing the financial services industry. He said, “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”

Will we see a new Glass-Steagall law (separating Wall and Main Street banks), or a simple, blunt set of guidelines for mortgage underwriting? So far, no. The speech was meant to be a shot in the arm for moves already proposed, including the creation of a Consumer Financial Protection Agency and regulation of the derivatives market.

So far, most of it is too vague and hypothetical for any industry group to get too concerned with. And they aren’t. B of A is making money off overdraft and other bank fees with gay abandon, while others are charging outrageous interest rates on consumer loans.

Obama barks, but has yet to bite.

[Go to http://www.financialwire.net/?s=philip+holmes to see more commentaries by Philip Holmes.]

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