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.
Probing Congress’ insider trades worthy if doomed 21 Jul 2014 U.S. watchdogs say dozens of investors may have profited from an illegal Capitol Hill tip. Lawmakers are stonewalling, though, and the statute they passed to ban such leaks may be unenforceable. Even so, the case could shame Congress into getting serious about policing trades.
Controversy upending Dodd-Frank’s smartest goals 21 Jul 2014 Four years after the landmark financial regulation became law, some of its simplest ideas now seem complicated. Critics accuse the systemic risk council of opacity and bias. Living wills are proving cumbersome to implement. And Congress may have mucked up consumer protection.
Potent Russian sanctions show Europe the way 17 Jul 2014 Moscow markets tanked after the U.S. agreed new, tougher economic measures against Russia over its role in Ukraine. Sanctions work. The EU should remember that when announcing its own plan in a few weeks – unless Vladimir Putin offers an olive branch by then.
Citi settlement imposes awfully pricey babysitter 14 Jul 2014 An ex-prosecutor will watch the bank as part of its $7 bln deal with Uncle Sam. That may ensure compliance. But as Apple and others can attest, monitors are too often meddlers fond of excessive oversight and multimillion-dollar fees. Shareholders get stuck with the tab.
Citi’s mortgage payout removes only some shackles 14 Jul 2014 The mega-bank’s shelling out $7 billion to settle with the U.S. government. With its bad bank finally in the black, too, Citi’s pulling free of the financial crisis. What’s emerging, though, is a serial underperformer that retains a knack for getting whacked by problems.
U.S. may finally have a mortgage reform blueprint 10 Jul 2014 A new bill would wind down Fannie and Freddie and use market-based pricing for Washington’s home loan guarantees. It has been a long time coming, and it probably won’t go anywhere until at least next year. But it could be the kind of middle ground both parties eventually accept.
Edward Hadas: Google, privacy and the common good 9 Jul 2014 There is no perfect balance between the public’s right to know and the individual’s right to privacy. Businesses might want to duck the debate, but a European court has made neutrality impossible for Google. Like it or not, companies are well placed to help draw the lines.
U.S. insider trading cops pick a bad time to lose 9 Jul 2014 The acquittal of Raj Rajaratnam’s brother comes as the nation’s lawmakers thumb their noses at an SEC probe of their trades. The cases are unrelated, but appearances matter on Capitol Hill. If watchdogs look like they’re overreaching, they can expect more pushback from Congress.
UK takeover rules are fiddly but fit for purpose 9 Jul 2014 AbbVie, the U.S. pharma group, has retracted comments made about shareholder support for its $51 bln bid for London-listed Shire. Britain’s M&A framework is tripping up overseas predators. But the system works: it avoids legal tangles and ensures investors are treated fairly.
American experimentation with weed worth watching 8 Jul 2014 Colorado inhaled about $11 mln in taxes during the first four months of retail marijuana sales. In Washington state, red tape has created bottlenecks as pot goes legal. Other governments considering legalization can learn best, and worst, practices from these experiences.
Commerz probe to test Merkel’s financial diplomacy 8 Jul 2014 The German bank is the next target of American prosecutors’ scrutiny on dealings with blacklisted countries, after BNP Paribas. Commerzbank is partially state-owned. Potential mega-fines could stretch U.S.-German relations already strained by spying scandals.
Quickie stock sales toy with Volcker Rule spirit 2 Jul 2014 Wall Street has used block trades to move $23 bln of equity for public companies this year, almost as much as IPOs have raised. They’re a handy tool and easy way for banks to gain league-table credit. But at times the line blurs between capital-raising and banned prop trading.
China energy patent boom makes output look a bust 2 Jul 2014 The Middle Kingdom topped the world in filings for oil and gas inventions last year, but that hasn’t translated into surging production. Many of the applications cover dodgy ideas fueled by government incentives. It will take more than paperwork to speed the flow of crude.
No moral high ground in banks’ fight with U.S. law 2 Jul 2014 It’s reasonable to question America’s ability to use the dollar’s global status to impose its foreign policy on a recalcitrant world – and then go after lawbreakers like BNP Paribas. But the financial industry, whether offshore or on, isn’t credible enough to make the case.
Tax-arbitrage M&A requires a deep discount 1 Jul 2014 U.S. companies seeking to relocate by mergers were a big part of the $1.8 trln first-half deal boom. The benefits of such ill-conceived combinations will be fleeting. Tax reform is already being discussed. And the more inversions there are, the more likely the law is to change.
U.S. cooks up penalties with anti-foreign flavor 1 Jul 2014 New research shows that overseas firms like BNP Paribas do in fact pay bigger fines and plead guilty more often than U.S. companies. One reason may be that prosecutors target only the most serious cases abroad. But the gaps feed suspicions that America is playing favorites.
BNP’s Prot should go 1 Jul 2014 The French bank has pleaded guilty to criminal wrongdoing and will pay a near-$9 bln fine to U.S. authorities. Chairman Baudouin Prot was CEO when BNP Paribas was helping clients evade U.S. sanctions. His position is untenable. In the name of accountability, he should resign.