Regulation

Facebook hires one weapon for two-handed fight

19 October 2018

Nick Clegg, former UK deputy PM, will lead global affairs at the $450 bln social network. His anti-Brexit stance and EU background could help with tribulations in Brussels. But he’s an odd choice to deal with Washington, where scrutiny may intensify after the midterm elections.

Holding: Company babysitters get deserved spanking

18 October 2018

The U.S. Justice Department will cut back on hiring monitors for corporate wrongdoers. Trusted to keep Citi, Apple and others in line, these super-nannies often turn into meddlers fond of excessive oversight and fees. Policing business misconduct is too important to outsource.

U.S. Treasury hasn’t yet been Trumped

17 October 2018

China again escaped being named a currency manipulator by the U.S. agency, despite pressure from the president. Although some trade-related penalties are already happening through other means, it’s a rational decision. Steady hands at Treasury and the Fed offer investors comfort.

SEC data-fee ruling hits exchanges where it hurts

17 October 2018

The U.S. securities regulator’s rejection of two increases won’t hurt NYSE and Nasdaq in the short run but it does challenge their business model. The fragmentation of equity trading has made data as valuable as execution or listings. Losing pricing power is a big risk.

Suppliers are main hurdle to UK supermarket tie-up

16 October 2018

Regulators will include online and discount retailers when deciding whether J Sainsbury’s $10 bln takeover of Asda restricts competition. That is likely to mean fewer store disposals. But the watchdog’s focus on combined buying power squeezing suppliers could yet block the aisle.

Review: Forget robots, capitalism is the future

12 October 2018

Ex-Fed boss Alan Greenspan and journalist Adrian Wooldridge have penned a fast-paced history of the good wrought by American entrepreneurs. But their solutions for today’s perceived stagnation – less welfare and fewer regulations – undervalue the adaptability of their subjects.

Pret’s soured image puts fat returns out of reach

11 October 2018

The ubiquitous sandwich chain is under fire after two customers died from contaminated food. When owner JAB bought Pret in May, upping margins to create lucrative returns looked straightforward. The cost of clearing up its mess now means those returns could be much less, or zero.

U.S. deal review could be new stick to beat China

10 October 2018

Minority stakes in U.S. tech firms will be under tougher scrutiny starting next month. That’s reasonable, and the Treasury, which will oversee reviews, has a rational approach. The risk is that hardliners co-opt the process to hurt Beijing once tariffs reach their limit.

UK auditor competition drive comes at a price

9 October 2018

The UK Competition and Markets Authority wants to break the grip of the Big Four accountants. It may duck radical measures, like forcing them to separate bookkeeping and consulting. Even simple ones, like market share caps and joint audits, will mean higher costs for companies.

The Exchange: Jeff Lacker

9 October 2018

The presidency of the Richmond Fed, whose territory included two top U.S. banks, offered a unique window on the financial crisis. Wachovia needed rescuing and BofA’s deal to buy Merrill Lynch nearly collapsed. Lacker reflects on what went down and where finance is headed.

Google inadvertently makes case for data crackdown

9 October 2018

The search giant kept secret a security hole to avoid regulators’ scrutiny, the Wall Street Journal says. The lack of transparency underlines that such disclosures should be out of managers’ hands. U.S. lawmakers eyeing a law similar to Europe’s GDPR have an extra argument.

UK tries shock therapy for fund liquidity disease

8 October 2018

Britain’s FCA is clamping down on open-ended funds that invest in hard-to-sell assets. One suggestion is to force funds to suspend redemptions – as happened in the chaos after Brexit – more frequently. That might eventually lead investors to pick less ropey fund structures.

Hadas: Nobel rewards pointless economic modelling

8 October 2018

Paul Romer won half the 2018 prize for recognising that education and governments help growth. William Nordhaus won the other half for condemning man-made climate change. Obvious? Maybe, but their work has complex equations. Unfortunately, these obscure more than they clarify.

Facebook is late to fight second existential crisis

5 October 2018

User and government annoyance at poor security, low-quality content and excessive advertising is as big a danger to Mark Zuckerberg’s company as the 2012 growth of mobile. Facebook finally appears focused on the threat, but it won’t be as easy to solve.

Shale gas industry hopefuls face rock-hard barrier

5 October 2018

Fracking is about to make its debut in the UK. The practice of extracting gas from shale rock is hailed as likely to put the country on the road to fuel self-reliance. But the industry faces many obstacles, and investors should be sceptical of the scope for gushing returns.

Cyber risks deserve top billing more often

4 October 2018

Global trade tensions have dominated recent economic news. Thursday’s revelations of possible Chinese computer-hardware meddling and Russian hacking of a world chemical-weapons body and sports-doping watchdogs give justified prominence to what may be a bigger threat to growth.

Danske’s best-case scenario may be a painful fine

4 October 2018

The Danish bank said it faces a U.S. criminal probe over suspicious payments in Estonia. That raises the risk that it could be blacklisted in America, which sank Latvian peer ABLV, or be fined. Even a plausible $5 bln hit would send Danske’s capital ratio below its minimum level.

M&A bankers better off hunting pheasant than elk

3 October 2018

The value of deals above $10 bln popped by 150 pct in the first nine months of the year. Some, like Comcast’s purchase of Sky, come with chunky financing fees. Still, the glory is spread less thinly on smaller deals, which are also growing quickly, and are easier to close.

Hadas: Why houses are not like pigs

3 October 2018

Farmers respond to high pork prices, so the hog cycle keeps turning. It’s different for housing. An excess of money, not a shortage of buildings, usually turns prices upwards. And the cycle reverses when the money runs out, sometimes because lenders take fright at new supply.

Credit Suisse LBO defence is a hostage to fortune

3 October 2018

The Swiss bank’s asset management arm lauded the attractions of the leveraged loan market in a letter to clients last month, according to the FT. The pitch will do little to reassure those who are alarmed by the erosion of lenders’ rights and could backfire when the market sours.