Russia is hitting back against U.S. and European economic sanctions with some of its own.
Russian Prime Minister Dmitry Medvedev said today that Russia will ban the import of food and agricultural products – including pig meat, cow meat, chicken meat, fruit, vegetables and dairy products – from the U.S., EU, Canada, Norway and Australia.
This is not the first Russian ban on U.S. foods. Last February, Russia closed its door to American beef and pork, citing a zero-tolerance policy to additives that are fed to U.S. cattle and hogs. U.S. beef exports didn't suffer significantly.
"Even with Russia out of the picture, our beef exports set a record last year of more than $6 billion," said Joe Schuele, communications director with the U.S. Meat Export Federation.
Beef exports to Russia may have halted, but the American poultry industry exported $129 million worth of chicken, mostly chicken legs, to Russia in the first half of this year. Still, Russia is only about 7 percent of the U.S. export market, down from as much as 40 percent in recent years.
"If this would have happened 10 years ago, it would have been catastrophic," said Jim Sumner, president of the USA Poultry and Egg Export Council. "But fortunately our industry is far less dependent on Russia as one of our key markets."
In 2013, the U.S. exported a little over $1 billion worth of foodstuffs to Russia, while the EU exported $16 billion. However, some Russia watchers think it may be Russians who bear the brunt of the ban.
"At a minimum, Russian consumers are going to see a large number of products disappear, and in replacing them they're likely to see an increase in food prices," said Steven Pifer, a senior fellow at the Brookings Institution.
Bank of America is reportedly ready to pay up to $17 billion to atone for selling lousy mortgage investments in the run-up to the financial crisis. Overall, big American banks are paying more than $100 billion in settlements like this.
For the banks, paying settlement costs is a way to move past the darkest days of the meltdown. But many financial observers still point to enduring problems on Wall Street. Chief among them is the issue of risk and reward.
Bankers didn’t create and sell dicey mortgage investments because they wanted to decimate the world’s economy. They did it because their bank bonus structures paid them handsomely for doing so. They were incentivized to keep going, long after red flags popped up.
“No one slammed on the brakes,” says Charles Kenji Whitehead, a Cornell Law School professor and former high-level banking attorney. “Have we actually done anything to address that problem? Not really.”
Whitehead thinks recent changes on compensation and risk don’t do enough. Banks say going further would damage their business, maybe even make it more expensive for small businesses and regular people to bank.
And as far as all those multi-billion dollar settlements, don’t forget who really pays the tab.
“We've seen only punishments of shareholders,” says Jim Sinegal, Morningstar’s lead bank analyst. “A lot of the executives, a lot of the people making money -- making the most money in some cases -- are not getting punished at all.”
Dennis Kelleher runs the nonprofit Better Markets. A critic of Wall Street, he takes a dim view of recent bank settlements, saying they should be bigger and more transparent.
But at the same time, he is optimistic about moves being made related to the problem of Too Big to Fail, the worry that taxpayers will get stuck bailing out banks. He appreciated regulators telling banks this week that their disaster planning doesn't cut it.
“Rejecting these plans was a tremendous stride on behalf of the American people to get financial reform in place,” Kelleher says.
But of course, the rejection of those Too Big to Fail plans means there still aren't acceptable ones.
Mark Garrison: When bank settlements get announced, Charles Kenji Whitehead zeroes in on one thing.
Charles Kenji Whitehead: If you read the statement of facts that get issued, your jaw drops at just how lax some of the internal controls were at these banks.
He’s a Cornell law professor and former high-level banking attorney. Bankers made and sold dicey mortgage investments because their bank bonus structures rewarded them for it. And as a result, even when red flags went up. . .
Whitehead: No one slammed on the brakes. Have we actually done anything to address that problem? Not really.
Whitehead thinks recent changes on compensation and risk don’t do enough. Banks say going further would damage their business, maybe even make it more expensive for regular people to bank. And as far as all those multi-billion dollar settlements, don’t forget who really pays the tab.
Jim Sinegal: We’ve seen only punishments of shareholders.
Jim Sinegal is Morningstar’s lead bank analyst.
Sinegal: A lot of the executives, a lot of the people making money, making the most money in some cases, are not getting punished at all.
Then there’s the problem of Too Big to Fail, that taxpayers will get stuck bailing out banks. Dennis Kelleher runs the nonprofit Better Markets, a Wall Street critic. He takes a dim view of the bank settlements, saying they should be bigger and more transparent. But at the same time, he’s glad regulators told banks this week that their disaster planning doesn’t cut it.
Dennis Kelleher: Rejecting these plans was a tremendous stride on behalf of the American people to get financial reform in place.
But of course, rejecting those plans means there still aren’t acceptable ones. In New York, I'm Mark Garrison, for Marketplace.
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