Great Recession has spawned weak economic thinking 22 Aug 2014 Post-2008 navel-gazing has produced some doubtful notions. Thomas Piketty’s excessively popular wealth theory is one. Others are a déjà-vu fear of stagnation and overdone hopes for monetary policy and regulation. Maybe another year’s Jackson Hole gathering will debunk them.
BofA’s FIRREA-swallowing act causes indigestion 21 Aug 2014 Regulators are using the obscure law with longer deadlines to extract hefty penalties, including a record $16.7 bln from BofA. Even Countrywide’s Angelo Mozilo seems in their grasp. Aggrieved investors may be appreciative but it’s a dubious way to make up for a missed crackdown.
Alibaba deal spree turns from romance to thriller 15 Aug 2014 A Hong Kong-listed movie company has revealed accounting problems four months after the e-commerce giant bought a stake. It’s not clear whether Alibaba’s controls were flawed. But investors in its upcoming IPO may be less confident about the company’s investment binge.
U.S. commercial and legal reach pegged to dollar 14 Aug 2014 Whether fining foreign banks like BNP or barring U.S. firms from business with governments it wants to punish, Uncle Sam has huge global clout. Having big companies and banks is part of it, but issuing the world’s reserve currency – and clearing trades at home - may do more.
IPO exuberance ensnares Deutsche, Wells Fargo 13 Aug 2014 The two banks nixed a biotech deal six days after it started trading. Their reasoning looks defensible – an insider reneged on buying a big chunk of shares. But the Wall Street firms’ willingness to sell the stock in the first place smacks of a return of top-of-the-market laxity.
Credit score change tests U.S. bank reform resolve 8 Aug 2014 Revising so-called FICO math mainly reflects political pressure to help more Americans borrow. It’s a bit like the government’s push for home ownership before the 2008 crisis. So far, bank regulators are mostly still leaning the other way. But lenders can also play their part.
China’s censors dim Tencent’s overseas push 8 Aug 2014 New rules to deter online rumours knocked $5.6 bln of market value off the owner of messaging app WeChat on Aug. 7. Tencent’s core gaming revenue shouldn’t suffer. But the crackdown comes amid a fierce global land grab by chat apps. China’s paranoia could help foreign rivals.
China’s antitrust drive: a guide for the perplexed 8 Aug 2014 Beijing’s competition agencies are on the warpath. Foreign automakers, consumer groups and tech firms have all faced scrutiny. Is China serious about breaking monopolies, or is it just practicing industrial policy in disguise? Breakingviews explains what’s behind the crackdown.
Private equity discord is best collusion defense 7 Aug 2014 Blackstone, KKR and TPG are paying $325 mln to resolve allegations that they conspired to limit buyout prices. Three other firms previously settled for less. Carlyle is holding out for now. Legally, there’s safety in numbers. Yet they can’t even agree on how to resolve the case.
BofA swaps legal fight for earnings battle 7 Aug 2014 A $16.5 billion settlement with the U.S. government would resolve most of the bank’s mortgage woes. But CEO Brian Moynihan needs to find up to $10 billion extra a year to create a respectable bottom line. That will require costs cuts, tax breaks and higher interest rates.
Yuan’s rise driven more by fear than fundamentals 7 Aug 2014 After months of weakening, the Chinese currency has reversed course. Policymakers are also rethinking their timetable for making it basically freely tradable. Even if intentions are good, fear of damaging capital inflows and outflows makes it hard for the central bank to let go.
Wall Street watchdog looks wimpy ducking court 6 Aug 2014 The SEC is using its own administrative judges to hear more complaints, as the Dodd-Frank law allows. That may make lawsuits easier to win, but it weakens judicial oversight and suspects’ legal rights. Stronger cases, not friendlier jurists, would serve the regulator better.
Bank living-will flop may open door for boutiques 5 Aug 2014 Watchdogs have again rejected crisis breakup plans from the likes of JPMorgan and Goldman Sachs. Granted, this Dodd-Frank requirement is not as important as once thought. But if mega-banks can’t get it right, perhaps their smaller rivals’ restructuring units would have more luck.
Microsoft’s China dream sorely strains credibility 5 Aug 2014 After 22 years, it’s hard to believe how little the U.S. tech giant has achieved in China. The country looks to account for just 2 percent of Microsoft’s revenue. Cloud services and Xbox sales may multiply that. But an antitrust probe raises the cost of business - possibly too high.
U.S. corporate émigrés may one day long for home 4 Aug 2014 High-flyers at firms like Goldman Sachs sometimes think they can do better striking out alone – only to fail for lack of the business card they’d undervalued. So it may prove with U.S. companies that invert, merging with foreign firms to gain domicile overseas and save on taxes.
Too-big-to-fail at least hibernating, if not dead 31 Jul 2014 A new U.S. government study suggests giant banks have lost the big funding-cost advantage they had over smaller ones in the crisis years. That suggests some success in making bailouts a thing of the past. The problem, though, is whether it sticks next time markets turn nasty.
Rob Cox: MetLife CEO should revel in his anonymity 29 Jul 2014 That almost no one knows ol’ so-and-so is good for shareholders. How he handles the mega-insurer’s likely designation as a systemic threat could change that. A Jamie Dimon-style fight would be foolish. Better to speak softly and keep the name Steve Kandarian out of headlines.
China throws weight around on car parts costs 28 Jul 2014 The whiff of a price probe into vehicle parts was enough to bring concessions from luxury groups Audi and Jaguar Land Rover. That will hit profits, but experience shows in China it is better to admit guilt early than risk bigger fines, or lose access to a critical market.
U.S. money market rules better late than never 23 Jul 2014 It’s six years since the Lehman collapse infected supposedly cash-like mutual funds. The SEC is finally requiring market valuations for some and introducing possible limits and fees on withdrawals. Though tainted by messy compromises, the changes should reduce the risk of runs.
“New Deutsche” just got pushed back again 23 Jul 2014 The German investment bank is under fire from U.S. regulators for poor-quality financial reporting. In recent months Deutsche Bank has raised capital and revamped strategy – but that’s the easy part. Making investors believe culture has genuinely changed will take much longer.