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.
Hong Kong raises stakes in U.S.-China audit battle 27 Mar 2013 The local regulator is suing Ernst & Young for withholding documents on a suspect client. The audit firm says Chinese secrecy rules left it no choice. The case mirrors a broader U.S. complaint about Chinese accounting frauds. But Hong Kong has much more to lose.
Latest blast from Basel misses obvious target 26 Mar 2013 The Basel Committee wants to reduce banks’ exposure to any one institution to cut overall risk. There’s one exception: governments. The spectre of sovereign default still haunts Europe’s banks. Basel should tackle this risk sooner rather than later.
U.S. Congress revs up to squash its own swap rules 25 Mar 2013 A bill that claims to flatten the playing field for U.S. and foreign derivatives traders drew unanimous support in its first test. But it would create a giant loophole in the Dodd-Frank reforms and make regulators’ jobs harder. That’s no way to reduce systemic risk.
Review: Seeing through bankers’ woolly thinking 22 Mar 2013 Banks like to argue that higher capital ratios kill lending. A new book by economists Anat Admati and Martin Hellwig exposes this as self-serving. But getting lenders to bear their true costs to society will mean overcoming vested interests that extend beyond the industry.
Central banks have key role to play fixing Libor 21 Mar 2013 Benchmark interest rates are public goods, as the Bank of International Settlements contends. The yardsticks can also be huge: bonds worth $10 trln reference the London interbank rate. It is only right that a state-sponsored authority such as a central bank oversees rate setting.
Forget a flood of telco deals after EU thaw 21 Mar 2013 The EU is rightly easing up on the sickly sector. But competition concerns seem likely to prevent an M&A bonanza. Until the “single market” Brussels wants becomes a reality, many local deals will consolidate markets too much. And cross-border ones will lack financial sense.
UK rightly tackles company pension power imbalance 21 Mar 2013 For years, pensions regulation has seemed to treat firms purely as entities to pay retirement payouts. A line in George Osborne’s budget heralds a more realistic approach: regulators should consider employers’ growth prospects too. Scheme sponsors and pensioners can both cheer.
Fed’s supertanker looks destined to make big waves 20 Mar 2013 The U.S. central bank shows no signs of scaling back $85 bln of monthly bond buys and says much time would elapse between ending purchases and raising rates. Yet the Fed’s 2015 target of up to 4.5 pct is a far cry from six years near zero. The rapid turn could shock the system.
Cypriot mess sets bar high for euro banking union 18 Mar 2013 The new super regulator might not have been able to stop Cyprus’ banking blowup. Nor could it have easily protected depositors from losses. The mess does highlight the need to be able to wind down failing banks. Bringing forward the mooted bail-in regime is imperative.
China’s new market watchdog may lack teeth 18 Mar 2013 As chairman of Bank of China, Xiao Gang’s job was to lend. As head of the securities regulator, his challenge will be to take on vested interests and make state banks weaker. Xiao has the right experience, but discouragingly, his rise looks partly down to doing as he’s told.
Maybe SAC should forget about other people’s money 15 Mar 2013 Steve Cohen’s $15 bln hedge fund firm is paying $616 mln to settle SEC insider trading charges. It would be an ignominious time to follow legends like Stan Druckenmiller, but he is already losing a quarter of outside investor funds. It could be time to manage only his own cash.
Senate’s JPM roast also singes failed watchdog 15 Mar 2013 Whacking the bank led by Jamie Dimon over last year’s $6.2 bln trading loss was a given - and deserved. Many of the subcommittee’s claims that JPMorgan misled the OCC smack of political grandstanding. But the portrayal of the regulator as a bumbling fool looks spot on.