Regulatory dithering can cost the economy dearly 22 Apr 2014 The U.S. government’s continued deferral on the Keystone pipeline decision is a case in point. One year’s economic benefit from the project may be $1.8 bln; if the answer is no, the energy system can be optimized another way. Win or lose, regulators need to make up their minds.
Blackstone leaves a trail of money to follow 17 Apr 2014 The buyout firm generated record quarterly earnings, in stark contrast to Wall Street’s slog. It’s the latest sign of a power shift from banks to shadow banks, broadly defined. Having confined big lenders, watchdogs could pick up the scent on Steve Schwarzman and his ilk.
Europe’s banks lose their cover on leverage ratio 11 Apr 2014 European lenders used to defend their lowball equity-to-assets ratios by claiming U.S. rules were more lax. But new American proposals would use fundamentally the same methodology, with a higher pass mark. Tougher standards for EU banks are now much more likely.
UK investors wake up to asleep-at-the-wheel charge 11 Apr 2014 Disunity is one reason institutional shareholders look drowsy in the face of corporate excesses. Reforms to the way UK-based investors cooperate on governance could make them more alert by setting and enforcing clear standards. The risk is they default to cruise control.
Arbitration arbitrage whipsaws investors 10 Apr 2014 The likes of Goldman and Citigroup typically favor industry-run proceedings as cheaper than lawsuits and easier to win. With reforms eroding their edge, however, they’re now demanding to go to court. Allowing banks and not investors to pick the forum makes the system look rigged.
Time to bust China’s “omniscient regulator” myth 10 Apr 2014 The country’s dueling financial watchdogs are undeniably smart. But as shadow banking runs amok, they have limited tools to fight problems they didn’t create. Some reforms are beyond their power, others are tied up in red tape. It undermines the theory that China is crisis-proof.
Tart goodbye from SEC’s Goldman nemesis rings true 9 Apr 2014 A retiring lawyer who helped sue the bank slammed the U.S. regulator for going easy on Wall Street bosses. The criticism backs widespread suspicion that watchdogs were timid in pursuing financial-crisis misconduct. His words are a useful warning for the agency’s current regime.
Money market fund clarity could beat conformity 8 Apr 2014 U.S. watchdogs are considering floating values, limits on withdrawals and other measures to crisis-proof the investment vehicles, often seen as a nearly riskless alternative to cash holdings. But simply requiring each fund to pick – and publicize – its path could do the trick.
Memo to global bank regulators: stop bullying Asia 8 Apr 2014 The Financial Stability Board is supposed to coordinate global oversight of banks. But in key areas like avoiding another AIG and resolving cross-border busts, Asian countries are sidelined. They need to speak with one voice – and Europe and the U.S. need to start listening.
More to fear from big funds than big managers 7 Apr 2014 As global regulators hunt for future systemic risks, BlackRock argues that individual investment vehicles, especially leveraged ones, are the danger – not the firms that run them. That’s self-serving for the $4.3 trln asset manager, but also makes sense and fits with history.
U.S. finance star chamber could use some diversity 4 Apr 2014 A GOP lawmaker joined SEC officials in demanding more accountability from the Justice League-like watchdog panel, FSOC, created after the 2008 crisis. Too much sunlight could be harmful. But some additional voices and oversight could keep politics and unforeseen risks in check.
Asset managers are next too-big-to-fail headache 4 Apr 2014 Banks are getting stronger and more boring. Asset managers are bigger, sexier and more flighty, according to a speech by the Bank of England’s Andy Haldane. The risks sound similar to banking crises, yet need different answers. Regulators and practitioners need to up their game.
FCA boss looks prime candidate for bonus doughnut 4 Apr 2014 Even regulators get variable pay – Martin Wheatley got an 86,000 stg bonus last year. That’s puny by the standards of those he supervises. There would be big PR value in waiving his next award in the wake of last week’s bungled insurance probe announcement.
Euro crisis 2.0 will need a new shock absorber 4 Apr 2014 European banks kept yields in check by buying sovereign debt in 2010-13. Now that Basel III rules force losses to be deducted from capital, banks like BPI are shedding their holdings. It unpicks the notorious “doom loop,” but leaves the ECB explicitly on the hook in future.
GM can find small comfort in Toyota’s ride 1 Apr 2014 The U.S. automaker recalled more cars and doubled the estimated cost for the first quarter ahead of boss Mary Barra’s Capitol Hill grilling. Even so, Toyota’s recent fiasco suggests the financial fallout should be manageable. GM’s culture will be harder to repair.
GM, regulator dabble in Wall Street shortcomings 31 Mar 2014 A combo of laziness, greed and incompetence characterized the response by the carmaker and its overseer to the ignition switch fault. In this sense, the Detroit saga echoes many of the corporate and regulatory failings that preceded - and contributed to - the financial crisis.
UK authorities show worrying market ignorance 31 Mar 2014 Insurance stocks fluctuated wildly after the government and the regulator each broke price-sensitive news in a clumsy fashion. The failure to anticipate market mayhem betrays poor instincts. It argues for tighter rules around dissemination of news by those that supervise.
Official attention will make or break bitcoin 31 Mar 2014 Scrutiny from tax authorities and regulators may deter off-the-grid types who like the digital money for its anonymity. Yet interest from investors and even creators of derivatives could start drawing bitcoin into the mainstream. Either way, its days in the shadows are over.
UK energy watchdog supercharges breakup option 27 Mar 2014 The possibility of a radical restructuring of energy companies based in Britain just became a probability. A wide-ranging competition inquiry may eventually lead to splitting generation from supply, in line with the original privatisation plan. Centrica is in the crosshairs.
Fed raises bar for Europe’s bank stress tests 27 Mar 2014 The Federal Reserve has found flaws in the U.S. capital plans of HSBC, RBS and Santander. While two American banks also failed the assessment, the focus on process shows the credibility of Europe’s stress tests will depend on more than capital quantum.