Trustbusters give Obamacare a splitting headache 30 Jan 2014 Hospitals, doctors and bankers figured mergers would enhance efficiency, one of the president’s goals. Now a court says they can hurt competition and wants a deal undone. The troubled law could use a break from its many woes, but a dose of antitrust scrutiny might do some good.
Barnier’s bank-split snafu mars his achievements 29 Jan 2014 Brussels’ financial tsar will soon move on, having made tangible progress on resolution, capital requirements and trading. But the European commissioner’s prop trading ban and curbs on market-making leave far too many grey areas. It needs a rewrite – which it will certainly get.
Bank bail-in dogs are only sleeping 27 Jan 2014 The punishment of bank creditors in the Cyprus bailout, and EU plans to “bail-in” the bondholders of failing lenders, mean that bank debt is no longer safe. Investors aren’t fretting – which is a mixed blessing. Cheap funds help banks lend. But markets may not always be so kind.
Audit spat pokes hole in China’s financial edifice 23 Jan 2014 Large accounting firms broke U.S. rules to avoid breaking Chinese ones. Now they face a six-month bar from the SEC. While it’s hard to feel sorry for the Big Four, investors have staked billions of dollars on China’s grey areas staying grey. Upholding the law may bring big costs.
Germany’s tough love adds to Deutsche’s woes 20 Jan 2014 Banking regulator Bafin and German politicians are turning the screws on the country’s flagship bank. The tougher scrutiny is partly due to the general anti-banker mood, but things could turn sour quickly. Investors are disregarding this tail risk at their own peril.
Ex-Tyco chief’s release puts prosecutors on spot 17 Jan 2014 After more than eight years doing time, Dennis Kozlowski has paid his dues. Wall Street honchos haven’t. Their firms have been punished instead, at a high cost to investors and staff. Lucrative settlements and elusive proof don’t ease doubts about the government’s record.
Deutsche is wasting its Libor crisis 16 Jan 2014 The German bank’s leadership promised cultural change. But the management response to Libor has been piecemeal – or has backfired. Relations with its home regulator appear strained. Co-chiefs Juergen Fitschen and Anshu Jain have a last chance to engineer visible renewal.
Ambitions exceed delivery in Europe market reform 15 Jan 2014 The aims of the revamp of regional market trading rules are laudable: more transparency and greater investor protection. Some of the changes are good. Others, notably caps on off-exchange share trading, may prove heavy-handed. But it’s not too late to refine the implementation.
Net neutrality requires bolder U.S. backing 14 Jan 2014 Washington’s communications watchdog tried not to regulate broadband providers while also preventing them from discriminating between content types. Now a court says it can’t have things both ways. With broadband pipes often oligopolies, internet users need Uncle Sam to step up.
Leverage reprieve may be short-lived 13 Jan 2014 Basel’s softening of its equity-to-assets metrics will help European banks like Deutsche and Barclays, which have big fixed income trading operations. Differences with U.S. regulation are narrowing. The flipside is that a common global measure could in time be raised more easily.
Difficult second coming pays off for Chinese IPOs 9 Jan 2014 Exuberance is inevitable as China ends a year-long moratorium on new listings. Controls mean the market is rigged in favour of investors. But that’s OK. In the long run, China needs a functioning equity market to help efficient companies grow, and reduce its addiction to credit.
Indonesian mineral export ban is mistimed idealism 9 Jan 2014 The mining ministry wants to delay a proposed ban on shipping raw commodities by three years. But exports of nickel and bauxite could still be blocked immediately. Nudging miners to invest in domestic processing has merit, but barring sales could widen the trade deficit.
Europe risks Volcker-Vickers banking fudge 7 Jan 2014 The latest thinking in the European Commission is for an outright ban on prop trading, emulating America’s Volcker rule, with ring-fencing for other trading, imitating the UK’s Vickers proposals. The compromise has the single market in mind. But it will need careful calibration.
Double logic of $1 bln cyber deal reveals hotspot 3 Jan 2014 FireEye’s stock jumped 33 pct after buying Mandiant, a takeover that marries computer protection with attack response capabilities. Snowden’s revelations and data theft like Target’s should fan investor enthusiasm in 2014. So too will the continued appeal of smart acquisitions.
China’s bureaucrats play online war games 23 Dec 2013 Who controls the internet? The authorities can’t decide. The Ministry of Culture is an unlikely favourite, after it clamped down on unsavoury online games. It’s a tussle between the online entrepreneurship China says it wants, and the old-school bureaucracy it actually has.
Wall Street watchdog to lose one of sharpest teeth 20 Dec 2013 The U.S. Supreme Court is poised to muzzle shareholder class action suits. While not part of the SEC’s official arsenal, they help deter fraud. Letting the regulator levy stiffer fines could fill some gaps. But clamping down on private litigation will remove some serious bite.
Dueling watchdogs’ crossfire harms fraud victims 19 Dec 2013 It’s Irving Picard’s job to recoup Madoff Ponzi scheme losses. Yet U.S. prosecutors are about to snatch a $2 bln JPMorgan deal from under his nose. Such rival efforts in this and other cases can raise costs and delay payouts. More cooperation would better serve duped investors.
100 years of Fed competence led to cursed workload 17 Dec 2013 After humble beginnings, lawmakers heaped more and more responsibility on the U.S. central bank. Though it hasn’t always been perfect, its increasing power came from screwing up least. But some worry those many mandates may become too much to manage – if they aren’t already.
Uruguay’s weed spoils could get even higher 12 Dec 2013 The country is first to legalize marijuana trade, with production from co-ops, sales to locals only and prices fixed. Relaxing such restrictions, however, could really spark up the economy. The Dutch did well from cannabis tourism, but agribusiness could be the winner in Uruguay.
Watchdogs make Volcker Rule rod for own backs 10 Dec 2013 It bans U.S. banks from outright prop trading and from London Whale-style hedging. But banks have plenty of room to mint coin, including being allowed to bet on government bonds. Wall Street might still complain. But the onus is on regulators to prove if banks step over the line.