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.
Fading reform hopes take gun shares with them 10 Dec 2013 As the chances of new firearms legislation dissipate a year after the Sandy Hook school shooting, so too should the anxieties that propelled gun sales and the stocks of Smith & Wesson and Sturm, Ruger. Short sellers already have their sights set on a downturn.
Mexico’s bold move may end 10-year oil decline 9 Dec 2013 The Senate is debating removing the state monopoly on drilling and creating a sovereign wealth fund. Letting outsiders control wells and log reserves should appeal to Big Oil. It’s a smart way to reverse the past decade’s 25 pct output drop while keeping proceeds.
Anti-troll bill missing patently obvious fixes 6 Dec 2013 Congress has made a good start on reining in firms that buy intellectual property just to file infringement suits. But true reform would block the vague and self-evident patents that fuel such claims. Lawmakers know the problem. If only they could muster the will to address it.
Benefits of being "G-SIFI" seem to outweigh costs 6 Dec 2013 Since regulators published a list of systemic institutions in 2011, the banks concerned have boosted capital and tamped down their balance sheets. But smaller lenders, particularly in Europe, have done the same. The “too big to fail” club turns out not to be too harsh after all.
U.S. trading overseer goes a little rogue 5 Dec 2013 Wall Street firms are suing the CFTC for bypassing standard practice when it issued tough guidance last month on overseas buying and selling of derivatives. U.S. dealers may suffer as a result. Absent the usual analyses and consultation, it’s hard for the agency to make its case.
China anti-bitcoin ruling will shake believers 5 Dec 2013 Beijing won’t allow currency competition. The central bank has barred financial institutions from trading the pseudo-money, while reining in anonymous users. Bitcoin can still be traded, but the authorities are wary. The virtual asset has just lost a lot of its speculative appeal.
Libor losers become EU cartel winners 4 Dec 2013 Barclays and UBS escaped $930 mln and $3.4 bln of trust-busting fines for exposing Libor cartels. It’s compensation for taking the reputational hit of settling early with other regulators. When the saga is done, the balance of financial pain may be in the whistleblowers’ favour.
Volcker Rule looking too complex to be practical 4 Dec 2013 U.S. watchdogs may soon adopt a stricter version of the law banning prop trading than expected. That may impede banks’ ability to hedge risk and trade for clients. Using a blend of metrics to raise red flags and regulatory power to intervene would be smarter and more realistic.
New U.S. mortgage supremo set to be step backwards 26 Nov 2013 Congressman Mel Watt is President Barack Obama’s pick to be Fannie Mae and Freddie Mac’s new regulatory overlord. Last week’s Senate rule change makes him a shoo-in. But with no experience, clear political bias and campaign cash from both companies, he’s a bad choice all round.
U.S. trustbusting would make a great monopoly 25 Nov 2013 The Justice Department is beating the pants off the Federal Trade Commission with pushback on AT&T, US Airways and AB InBev deals. The FTC has scored points protecting consumers. Leaving antitrust to DoJ would reduce costly overlap and let the agencies play to their strengths.
U.S. consumer watchdog doesn’t deserve GOP’s wrath 21 Nov 2013 Republicans are again trying to dismantle the financial regulator set up under Dodd-Frank to protect Joe Public. So far, the CFPB is demystifying loans and punishing deceivers while taking heed of industry concerns. That kind of success is something to celebrate, not curtail.
Credit Suisse shows resolution has some way to go 21 Nov 2013 The bank is rearranging itself so it can deal with crises by issuing loss-absorbing debt from its Swiss holding company. In theory, that should mean fewer geographical silos. But nationally focused regulators mean Credit Suisse is also becoming more compartmentalised.
Derivatives detail could sink bank wind-down plans 18 Nov 2013 American and European regulators want to standardize contracts to help cross-border banks fail smoothly. If the problem isn’t fixed, investors could undermine financial stability by calling in swaps. It’s a reminder of how much work still needs to be done to end too big to fail.
Speculation isn’t always a dirty word 13 Nov 2013 The U.S. derivatives regulator wants to curb market manipulation by capping some commodities trading. It’s the wrong approach, not least because it could reduce liquidity with limited benefits. Transparency and stronger policing of large positions are enough to do the job.
TARP manager has tough act to follow at CFTC 12 Nov 2013 President Obama wants lawyer turned Treasury official Tim Massad to head America’s derivatives watchdog – replacing ex-banker Gary Gensler, whose zeal reshaped the agency. Massad’s swaps experience is thin, but his background may suit the CFTC’s increasingly hefty rulebook.
Bribery mea culpas can make firms look like chumps 6 Nov 2013 U.S. prosecutors offer leniency for voluntary disclosure of payoffs abroad. Diebold, Ralph Lauren and others got hefty penalties instead. The bait and switch erodes watchdog credibility and the law. Companies may stop cooperating absent legitimate carrots and a lot less stick.