U.S. banking overhaul gets a second wind 11 Oct 2012 Two years after Dodd-Frank thudded onto desks across Wall Street, regulators are on the stump with ideas from the cutting-room floor. Fresh on the heels of the hoopla to break up banks, the Fed’s top cop is pushing to cap their size. Too big to fail clearly hasn’t been resolved.
Switchback threat may floor UK bank lending move 10 Oct 2012 Moves to relax British lenders’ capital and liquidity requirements make sense. But banks won’t lend if they think regulators will revert to a tougher approach when things pick up. Unless supervisors can solve this basic design fault, macro-prudential policy may fail.
Oil price benchmarks left at risk of Libor moment 8 Oct 2012 Soft proposals from those who oversee influential oil price yardsticks may leave the likes of Brent open to insider manipulation. Braver reform - along the lines followed by the UK financial watchdog fixing the scandal-hit Libor interest rate - is merited.
New U.S. stress test needed: higher interest rates 4 Oct 2012 Don’t fight the Fed, the saying goes. The central bank is promising ultra-low rates into 2015. Yet the buildup of low-yielding debt on financial firms’ balance sheets means they may suffer badly if rates jump. The Fed aside, prudent bosses need to avoid fights with history, too.
EU banks still haven’t been properly stress tested 4 Oct 2012 The European Banking Authority’s latest stress test focused on sovereign woes, but not macro ones. The previous two had the opposite problem. The 2013 version should do both, as well as use consistent risk-weights of bank assets. Without all that, fear will still stalk investors.
Bank "de-regionalisation" adds to euro zone risk 4 Oct 2012 Peripheral EU banks kept buying more of their own sovereigns’ debt between December and June, new data shows. With yields sky-high that’s a nice earner, and keeps governments happy. But if the euro zone breaks up, they will have tightened the noose round their own necks.
Ring-fencing could reinforce EU banking disunion 2 Oct 2012 EU banks should fence off their trading assets, a European Commission advisory group says. That looks more like the tough UK Vickers reforms than banks had expected. The risk is national regulators get even more tribal in protecting their own, instead of embracing banking union.
U.S. banks securing some deserved debt relief 1 Oct 2012 A rule that forces them to book gains and losses on their own liabilities may at last be scrapped. At best, the accounting standard, implemented just ahead of the crisis, is a needless distraction - at worst, a way to mask a bad quarter. Its demise is overdue, but welcome.
Pandora’s income stream on congressional playlist 1 Oct 2012 The online radio company is shackled by music royalties that lock up about half its revenue. Newly proposed U.S. legislation would cut those costs to as low as the 8 pct paid by rival Sirius XM. A Breakingviews calculator shows just how much value that would release for Pandora.
Uber-regulator opens new front with money funds 28 Sep 2012 U.S. money market funds escaped reform at the hands of the Securities and Exchange Commission. Now Tim Geithner wants the Financial Stability Oversight Council to act. But the Treasury secretary looks too ready to compromise with an industry that has lobbied hard against change.
LSE shock over capital rules hurts Rolet 28 Sep 2012 Boss Xavier Rolet is wisely diversifying the exchange group. But new European rules make an already pricy bid for LCH.Clearnet even harder. With watchdogs everywhere fretting about systemic risk, he might have guessed regulators wouldn’t let clearing houses stint on capital.
How to make money out of fixing Libor (legally) 28 Sep 2012 Administrating the reformed interest rate benchmark will be put out to tender, under new UK plans. But it is not clear how the reworked scheme will be funded. There may be some licensing income to be had, but user levies may be required if the new regime is to be self-supporting.
UK blazes the right trail on Libor reform 27 Sep 2012 The scandal-hit benchmark should be retained but regulated, streamlined, and based on market data, says Martin Wheatley’s official review. Picking the right body to oversee the reformed process is crucial. But the proposals are a sensible blueprint for restoring trust in Libor.
BBA ouster is right first step for Libor reform 25 Sep 2012 The British Bankers’ Association is resigned to losing its role setting and overseeing the critical interest rate benchmark. After this summer’s rate-fixing scandal, that’s no surprise. Still, it’s an encouraging sign that Libor reform will be meaningful rather than piecemeal.
GE deal epitomizes U.S. bank regulation folly 24 Sep 2012 To free itself from the Fed’s strong grip, MetLife opted to unload $7 bln of deposits to the U.S. conglomerate. Tired of waiting for the headless FDIC’s OK, the insurer is enlisting the OCC instead. This classic arbitrage illustrates the trouble with the whole oversight regime.
Indonesia’s insolvency law is broke, needs fixing 20 Sep 2012 A court has declared the nation’s largest mobile operator bankrupt following a dispute over just $557,000. If the past is any guide, the verdict will be overturned. But Jakarta must revise its insolvency law before investors who have shrugged off the incident change their minds.
Regulatory pushback turns up heat on Marcus Agius 19 Sep 2012 Newly published letters from UK regulators cast doubt on evidence given by Marcus Agius, the former chairman of Barclays bank, to a parliamentary investigation into the Libor scandal. The fresh developments may make it tougher for him to rehabilitate his reputation.
ECB’s new clout could sort EU bank capital mess 19 Sep 2012 The European Commission thinks the euro zone’s rate-setter should vet the internal models used by banks to work out their capital ratios. The downside could be that some lenders need more capital. The upside could be that investors start to believe bank risk-weightings.
Hugo Dixon: Can EU defend supranational interests? 17 Sep 2012 Amidst the europhoria unleashed by the ECB’s bond-buying plan, it is easy to miss the immense challenges posed by two complex dossiers that have just landed on leaders’ desks: the proposed EADS/BAE merger; and how to create a banking union. Can they rise to the challenge?
Regulator’s past haunts India’s Sahara case 14 Sep 2012 The chairman of India’s securities watchdog is under a cloud. Last year, a deputy wrote to the prime minister alleging his boss was going easy on Sahara. Now that the conglomerate has been ordered to repay $5 bln to 30 mln investors, the regulator needs to show his independence.