Journalists
Dwight Cass joined breakingviews to spearhead capital markets coverage after serving as editor-in-chief of Worth, a magazine devoted to wealth management and related issues for affluent readers. Prior to re-launching Worth in 2003, he served as editor of Risk, a magazine covering risk management and the global derivatives markets. Dwight has nearly 20 years of business journalism experience, and has written for the Economist Intelligence Unit and IFR Publishing, among others. He holds a master's degree in international affairs from Columbia University and a bachelor's degree from New York University.
Despite dealers’ attempts to reduce counterparty risk and improve transparency since Lehman’s collapse, it looks as if US watchdogs aren't convinced. As politicians return to Washington from their summer breaks, Congress appears poised to crack down.
Bankers hope this year’s rally in equity markets will tempt buyout shops to float their companies. But while banks may feast on fees, IPOs may not work out as LBO firms expect. Investors have the whip hand in pricing highly leveraged firms with few refinancing options.
Brisk business reworking troubled mortgage bonds is driven in part by financial firms’ desire to minimise capital charges. But the underlying assets and potential losses stay the same – they just get shifted around. It's another case of regulators relying too much on ratings.
The US Congress is about to hit the beach, leaving the president’s ambitious agenda hanging. That’s probably good – remaking the banking world is not a task to be rushed. And Obama needs to get it right the first time.
Five big banks account for 80% of the total derivatives held by 100 large US companies, a new report says. That could be bad news for those trying to stave off greater regulation, because it undermines the idea that derivatives are crucial to the health of corporate America.
The Fed chief told Congress he can drain liquidity by boosting interest on banks’ reserve deposits. Those recently topped $800bn. If bank appetite for making loans returns, the Fed could have a hard time keeping that money from flooding into the economy.
The Justice Department is asking banks that own data provider Markit for information as it investigates possible CDS market abuse. Its legal options aren't clear-cut, but its ability to embarrass could threaten the lightly regulated environment favoured by derivatives dealers.
A bankruptcy filing by media chain Freedom Communications, named in honour of the code of personal responsibility its founder championed, looks to be another blow to a philosophy now sidelined by massive US government economic interventions.
Boss Mary Schapiro wants the US securities watchdog to chase higher-profile cases like those it recently agreed with BofA, Hank Greenberg and GE. But the fines it extracted are peanuts – and could undermine its new campaign against rule violations.
Key US lawmakers want standardised derivatives to be centrally cleared and traded on exchanges. But there’s little consensus over what “standardised” means. If the rules try to cast the net too wide, it could bog legislation down - or backfire by increasing risk.
JPMorgan and Moody’s think it may be. The $600bn-plus of US corporate bonds floated in the first half gave underwriters something to celebrate after a painful drought. But although market conditions remain attractive, the festivities may not last.
US regulators want to oversee all firms that deal in unlisted derivatives. That makes sense and could head off future AIG-like meltdowns. Dealers won’t like the scrutiny, but they’re more afraid of the government’s other big idea – forcing derivatives to be traded on exchanges.
Calpers is suing the big three over $1bn of losses on triple-A rated SIVs. The big US pension plan says they’re to blame since they helped structure the deals before rating them. That argument just might breach the raters' legal defences – and unleash a flood of litigation.
Calls to outlaw them – most recently by US lawmaker Maxine Waters – appear unlikely to succeed. But they’re affecting the larger debate over CDS regulation. If banks had been more forthcoming earlier about default swaps’ true nature, they might not be in such a bind now.