End of warehousing gravy train is reason to cheer 23 Jul 2013 Low rates, light regulation and a lack of publicity let banks and commodity traders pocket easy profits hoarding metal in their own warehouses. Banks were already eyeing the exit, but U.S. authorities’ fresh scrutiny of the socially useless practice should accelerate its demise.
For U.S. energy watchdog, pain beats shame 19 Jul 2013 It looks like FERC will impose two record manipulation fees in one month - $435 mln for Barclays and even more for JPMorgan. Token fines may not stop traders from pushing limits in easy-to-fiddle illiquid markets. Penalties that dwarf profits, though, will keep the sector clean.
Barclays’ $453 mln power-trade spat looks lose-lose 17 Jul 2013 The UK bank says the final U.S. regulatory judgment that it fiddled power prices is dead wrong. The fine is too large to count as a cost of doing business. Barclays may win in court, but a lengthy trial will keep the focus on the bank’s racy past, not its sober future.
GSK finds toxic side effects in Chinese market 16 Jul 2013 The UK pharma group is accused of using elaborate kickback schemes. But the Chinese combination of pervasive state involvement, underpaid doctors and coveted foreign products is almost an invitation for bad practice. A full cure requires time, money and stronger institutions.
Republicans add bricks and mortar to mortgage fix 15 Jul 2013 A new House bill offers some good ways to construct a durable financing market for home loans. It still has warts, but would reduce reliance on taxpayers and entice private capital back in. Together with the Senate’s more politically palatable version, it could be a winning mix.
Banks dodge a bullet with transatlantic swap deal 15 Jul 2013 A deal between U.S. and European regulators will allow transatlantic swaps to be booked outside America. The CFTC seems to accept Brussels’ own reforms could help stop another AIG-style blowup. Just as well: a tougher U.S. line could have wrecked business at all global banks.
SEC needs fab result in Goldman CDO banker trial 11 Jul 2013 The U.S. agency has already blown big cases against individuals over the financial crisis. Now the SEC aims to prove Fabrice Tourre, not boneheaded bets, caused investor losses on subprime bonds. Another flop in court could seal its reputation as an inept Wall Street watchdog.
EU bank resolution faces mother of all-nighters 10 Jul 2013 The European Commission wants to decide on whether euro zone banks should enter resolution, but accepts that national governments can’t be forced to put up their own money if it happens. When ministers meet later this year, expect the wrangling to go on even longer than usual.
Auditor rotation gets caught in a spin zone 9 Jul 2013 U.S. legislators, who can serve as long as voters will have them, advanced a heavily lobbied proposal to block the accounting watchdog from imposing term limits on financial book-checkers. Such meddling in regulatory affairs is bad form. And the audit industry needs a shake-up.
Bank leverage limits wise, but still fiddleable 9 Jul 2013 U.S. watchdogs are imposing a 6 pct ratio of equity to assets on the largest financial institutions. That’s more stringent than before the crisis. But it’s still too generic to be an effective risk-management tool on its own. Banks still have plenty of room to mess up.
Guest column: China’s shadow banks deserve credit 8 Jul 2013 Few people sing the praises of China’s alternative lenders. But trust companies, wealth management products and even kerbside lenders send important price signals, and make China’s finance flow more efficiently, argues shadow-bank insider Joe Zhang.
How regulators can restore trust in bank capital 5 Jul 2013 The Basel committee of bank supervisors has exposed big variations in how lenders risk-weight their assets. But forcing banks to use a standard model could require truckloads of new capital. There’s a middle way – parallel disclosure using both firms’ and Basel’s methodologies.
Indonesian anti-graft zeal sours business climate 5 Jul 2013 A Jakarta court will soon decide if offering Internet on a 3G network without paying mobile license fees is a corrupt practice. A guilty verdict will put small providers at risk and dent investor confidence just when the economy looks vulnerable to the risk of capital flight.
How to cut the cord on China’s shadow banks 3 Jul 2013 The explosion in non-bank credit is helpful, so long as it doesn’t bounce back on regular lenders. Ringfencing the risks requires banks to stop using cheap funding to lend off balance sheet. Savers also need to learn that investing in high-return products is no free lunch.
U.S. Basel embrace puts foreign watchdogs on spot 2 Jul 2013 The Fed is giving a thumbs-up to the Swiss-sanctioned global bank capital rules. The FDIC and OCC should follow suit soon. That quiets overseas critics skeptical that America would play ball. It should also coax Europe and Asia to show a similar team mentality on other issues.
Apple-Samsung patent clash more standoff than war 2 Jul 2013 As the iPhone maker waits for its rival to pay last year’s big verdict, the tech giants are inching toward another trial next year, and maybe even a third. Such judicial delay pushes patent holders to sue overseas or sell their rights to trolls. Swifter U.S. justice is needed.
India’s aspiring banking moguls fail to impress 2 Jul 2013 A few strong contenders aside, the 26 applicants for a handful of new banking licenses are local finance companies. Giving these shadow lenders access to retail deposits while saddling them with harsh licensing rules could backfire. India needs more banks, but not more weak ones.
Hugo Dixon: Financial reform must carry on 1 Jul 2013 After six years of crisis, progress has been made in fixing the financial system: for example, a landmark EU deal last week to make creditors not taxpayers foot the bill for bust banks. But there’s a huge job still to do. Policymakers must not flag.
Review: Tales from China’s wild lending frontier 28 Jun 2013 Former banker Joe Zhang spent a year running a microcredit firm, then wrote about it. “Inside China’s Shadow Banking” is part memoir, part advice for reining in the country’s credit boom. Despite the title, it’s the regular banks that are the ultimate source of the trouble.
Wall Street finds itself in a 1994 state of mind 26 Jun 2013 Back then a jump in rates inflicted mega damage. Goldman Sachs partners even had to recapitalize their firm. Bank bosses are confident today, saying they’re no longer holding inventory and ceded prop trading to hedge funds. If true, maybe they have regulators to thank.