U.S. budget spat puts bankers, lawmakers to shame 12 Dec 2014 Wrangling over a change to Dodd-Frank has delayed a deal to keep the government open. The amendment may only weaken financial reform slightly. But it smells bad that Wall Street wrote and lobbied for it. Allowing it to slow a $1 trln bill is another sign of Congress’s dysfunction.
Review: "Forgotten Depression" worth remembering 12 Dec 2014 James Grant’s new book on the U.S. government’s response to the 1921 crash is a timely reminder that our forebears knew of other, apparently more efficacious, remedies to cure financial hangovers than the hair of the dog.
Overreaching enforcers redraw insider trading line 10 Dec 2014 A U.S. court tossed convictions of two hedge fund managers, sharply narrowing the law on improper dealings. Prosecutors should expect more embarrassing reversals. The silver lining is that the ruling gives Wall Street clarity on what’s forbidden and should curb government excesses.
FCA boss has lucky escape in briefing fiasco 10 Dec 2014 Martin Wheatley keeps his job but loses his bonus after the UK regulator botched a media briefing on insurance in March. The report into the debacle sets out his weak response to the unfolding crisis. If he wasn’t doing a good job otherwise, he would have paid a higher price.
Citi boss etches a dangerous line 9 Dec 2014 The mega-bank is taking a surprise $3.5 bln charge mainly for Libor, forex and money laundering legal costs. CEO Michael Corbat says it should mostly put the issues to bed. That’s a bold call, especially given Citi’s approach to reserves. The words may yet come back to haunt him.
Bank misdeeds show lack of "should we" 26 Nov 2014 A Citi analyst settlement and a probe into an HSBC hedge fund leak aren’t about grey areas. The alleged transgressions break clear rules. As in a recent experiment reported by Nature, they betray bankers’ tendency to eschew what they should do for what they can get away with.
Wells Fargo: first big bank simple enough to fail 26 Nov 2014 The $1.6 trln lender secured a provisional stamp of approval from regulators for its living will. Less credible plans from 11 other titans suggest size isn’t the issue. Wells ranks fourth in assets and first in market cap. The real problems are complexity and interconnectedness.
Rob Cox: American banking has its own Tea Party 25 Nov 2014 Like the anti-establishment wing of the GOP, the Independent Community Bankers of America has emerged as a highly vocal opponent of all things Wall Street, including a Lazard banker’s nomination for a Treasury role. These are the plaintive cries of a dying breed of banker.
AT&T scrambles signals on smartphone privacy 24 Nov 2014 The U.S. telco wants clearer limits on government access to location data but won’t push for a requirement that enforcers get warrants. The mixed message matches the regulated firm’s history of cooperating with Washington. As tech rivals resist Uncle Sam, though, AT&T looks weak.
U.S. Senate commodities probe gets bank risk right 20 Nov 2014 The two-year investigation into Wall Street’s ownership of oil and other physical holdings is bigger on assertions than new evidence. But its warnings about capital shortfalls and systemic hazards ring true. They’re problems that need fixing regardless of the type of asset.
Dizzying revolving door risks overdone response 20 Nov 2014 Going from a U.S. government job to the private sector raises conflicts, as shown by events at Goldman. And a banker’s possible role at the Treasury is under fire. Such moves warrant clear rules, but cross-fertilization is valuable. It would be a shame to make it too hard to do.
Rob Cox: Good news for guns is bad for gunmakers 18 Nov 2014 A Republican U.S. Senate puts a bullet in new federal firearms controls. Yet Colt, maker of the gun that won the West, is short of cash, Moody’s downgraded Remington and shares of Ruger and Smith & Wesson have been clobbered. The industry does better with guns in a corner.
Markets get shot at crisis early warning system 17 Nov 2014 U.S. financial watchdogs now have access to oodles of new data about the $400 trln swaps industry. Mined properly, the information could highlight trends and oddities in time to head off disaster. Breakingviews suggests six dials for regulators to add to their dashboard.
Tax code, not bankers, deserves Congress’s ire 14 Nov 2014 Democratic Senator Elizabeth Warren reckons working on inversions rules Lazard’s top dealmaker Antonio Weiss out of a Treasury job. Such transactions may be dumb, but were neither unlawful nor unethical. It’s skewed rules that Washington needs to banish, not all of Wall Street.
Law firm M&A needs its own conflict resolution 12 Nov 2014 Patton Boggs’ merger with Squire Sanders arguably put the combined U.S. firm on both sides of a lawsuit. It’s possible the snafu will lead to disqualification from the case. Like Goldman and other Wall Street dealmakers, lawyers can be sloppy about policing skewed loyalties.
Barclays’ forex delay looks like bad news 12 Nov 2014 The UK bank says it is serving investors by deferring a settlement with the FCA and CFTC. Any gain from coordinating with other bodies needs to outweigh the loss of a quick-deal discount. Barclays knows from Libor that going solo is risky. Holding back suggests more is at stake.
Currency market is crying out for clearer rules 12 Nov 2014 Egregious attempts by some traders to manipulate exchange rates are easy to condemn. The thornier problem is the continued fuzziness about how to interpret some of the FX market’s rules of play, even at the UK regulator and the Bank of England. More clarity is urgently needed.
FX fines are wake-up call on self-policing 12 Nov 2014 The $3.4 bln settlement for five banks works out on average at 20 pct higher than Libor – because the firms failed to mend their ways. Regulators are seeking yet tougher internal controls. Banks have a last chance to show they can treat clients fairly.
Steve Cohen’s loot could land in undeserving hands 11 Nov 2014 A $600 mln insider trading settlement with his SAC hedge fund will probably go to investors on the other side of its dodgy deals. Better them than Uncle Sam. But the real victims were drug firms whose data SAC’s trader stole. U.S. watchdogs miss the mark in allotting fine proceeds.
Samsung-Microsoft row could defuse patent arsenals 10 Nov 2014 The Korean firm refuses to pay license fees because its U.S. rival breached their $1 bln deal. It’s more likely Samsung’s angling for a discount. That’s a savvy move. Court rulings and costly lawsuits are weakening patents as competitive weapons. This case may speed the decline.