U.S. flops at collecting fines and paying them out 9 May 2013 Federal agencies corral only a small fraction of the penalties they levy. Foreclosure-abuse settlements with banks show they’re just as bad at getting lawsuit proceeds to victims. Government glitches can be expected. But such widespread incompetence only encourages scofflaws.
Deterring short-term bank debt has long-term logic 7 May 2013 Fed Governor Daniel Tarullo reckons U.S. lenders relying more heavily on funding that can be withdrawn quickly should be forced to hold more capital. The linkage would layer on regulatory complexity, but also practical nuance. A disincentive on hot money could make banks safer.
U.S. debt bosses don’t need no stinkin’ Libor 1 May 2013 The Treasury wants to sell floating-rate debt, but the most common benchmark is discredited. Uncle Sam will use a new one based on government bill auctions. Treasuries are already the world’s touchstone for fixed-rate bonds. The new yardstick could credibly chip away at Libor.
U.S. courts hit right balance on foreign misdeeds 30 Apr 2013 Tough rulings make sense only when American interests are at stake. Judges acted wisely in pushing Arab Bank and others to answer charges of funding terrorism while letting Royal Dutch Shell off the hook on human rights. The law loses credibility if its reach exceeds its grasp.
Online sales tax may be only U.S. loophole closed 23 Apr 2013 There’s tough talk in Washington these days about unfair tax escapes. One that lets states collect on goods sold over the Internet could finally be set to pass. Despite a dire need for revenue, however, it’s hard to see this one clearing the way to cross others off a long list.
House finance chief puts politics over governing 23 Apr 2013 Jeb Hensarling, head of the U.S. House finance committee, has shunned the new consumer bureau’s chief. He complains Obama appointed Richard Cordray without congressional consent. The lawmaker would better serve finance, and democracy, by making his case with tough questions.
Barnier broadside leaves EU looking soft on banks 23 Apr 2013 The EU’s top financial regulator seems out of touch on banking reform. While his peers want lenders to keep more capital, Michel Barnier says the U.S. should give European banks a break. He thinks global teamwork can avert problems. History suggests that’s naïve.
It’s about time regulators cottoned on to Big Data 22 Apr 2013 Banks are griping about the newest U.S. financial watchdog’s appetite for stockpiles of borrower records. It’s not surprising given the industry’s zeal for asymmetrical information. Sniffing out unfair lending practices in the 21st century, however, demands 21st-century methods.
Two-tier money market fund reform as clear as mud 18 Apr 2013 The U.S. SEC is trying again to regulate these mutual funds, which compete with bank deposit accounts. But the rules could favor funds that invest in government debt over those buying corporate debt. That would complicate supervision and obscure, not clarify, the risks.
Crackdowns only make M&A leaks more tempting 17 Apr 2013 Dealmakers say tougher rules and enforcement are behind new data showing news is trickling out less often about companies for sale. Loose lips come with less chance of deals closing, but they also coincide with higher premiums. Some bankers will always fancy that risk-reward mix.
More resource transparency welcome, warts and all 10 Apr 2013 Forthcoming rules will require EU oil and mining companies to publish details of project-by-project dealings with governments. It will create extra work and may disadvantage Western producers. Still, the benefits of extra transparency should far outweigh the costs.
Excessive vacancies are a travesty of Justice 9 Apr 2013 Several key posts remain open at Barack Obama’s law enforcement department as deadlines loom to file financial crisis-linked cases. The president is already under fire for not nailing Wall Street miscreants. It’s starting to look like he and the Justice Department are giving up.
Crosby’s mea culpa shows need for pension clawback 9 Apr 2013 The former HBOS chief executive wants to hand back his knighthood and 30 pct of his pension. At least he has taken the initiative. But he will still have a mammoth retirement income. Regulators need ways to recoup executives’ entitlements if they leave behind a mess.
New ideas on TBTF, even if flawed, still welcome 8 Apr 2013 A coming U.S. bill will try again to end bailouts by forcing big banks to hold more capital against total, not risk-weighted, assets. It has the appeal of simplicity - and some drawbacks. At least the proposal will help keep lawmakers and shareholders focused on a crucial issue.
Fund managers need a risk-culture rethink 8 Apr 2013 Regulation is the chief buy-side risk, a new study has found. That’s bizarre since rules should dilute financial dangers. Asset managers may have to challenge regulatory caution if they are to run balanced investment risks. The high-grade sovereign bond bubble is a case in point.
American immigration deal looks too clever by half 2 Apr 2013 Big Business and Big Labor managed to strike a compromise on immigration reform. They want Congress to adopt a new program for lesser-skilled foreign workers. It looks sensible on paper, but its many rules and conditions may be too expensive and cumbersome for it to succeed.
R.I.P. the FSA: the watchdog with little bite 2 Apr 2013 So farewell then, the UK Financial Services Authority. You gave the world “light-touch” regulation and suffered the consequences. The belated zeal you found to issue fines and tackle insider trading was too little, too late. Few - bar the odd fraudster - will mourn your passing.
New chief US bank lawmaker needs minimal conflicts 28 Mar 2013 That’s why Sherrod Brown makes a better choice than Chuck Schumer to lead the Senate bank committee, whose current chair is departing. The Ohio politico may have fringey views about breaking up banks, but he’s more likely to challenge the status quo than a friend of Wall Street.
UK’s new bank capital tsar starts as good cop 27 Mar 2013 The Bank of England has ordered banks to raise 25 bln stg by the year end. But its required 7 pct core Tier 1 ratios fall short of some continental banks. The weak economy may have been a factor. And going softer makes a share sale of RBS or Lloyds easier before the election.
Pru pays price for ignoring M&A advice 27 Mar 2013 Adviser Credit Suisse pressed the UK insurer to tell the FSA about plans to buy AIA in 2010, but the Pru dodged regulators’ questions about strategy and financing issues - when deal talks were in full flow. CEO Tidjane Thiam may survive the resulting censure. His bonus shouldn’t.