Treasury’s Frannie fix puts Congress on the spot 17 Aug 2012 Team Geithner is forcing the two bailed-out home loan agencies to shrink their portfolios faster and hand all profit to taxpayers. These are excellent steps. But Fannie and Freddie remain too central to U.S. mortgage finance. It’s up to lawmakers to come up with the solution.
StanChart saga exposes U.S. regulatory mess 16 Aug 2012 The financial crisis didn’t kill the multi-headed U.S. regulatory monster. It made it stronger. Including the New York watchdog that made Standard Chartered cough up $340 mln, banks have at least eight different overseers. Such fragmentation is a weakness, not a strength.
Pharma industry can’t sugarcoat generic drug deals 16 Aug 2012 Pfizer is the latest company to sustain its patent over a medication by handing a rival exclusive, but delayed, rights to a generic version. That’s an anticompetitive quid pro quo, even if cash didn’t change hands. A U.S. court can protect consumers’ wallets by saying so.
StanChart has some explaining to do on settlement 15 Aug 2012 Why did the bank pay a U.S. regulator $340 mln after loudly claiming it had made just $14 mln of suspect trades? Relieved shareholders can call it the cost of a quiet life, but that doesn’t justify paying up. For credibility’s sake, StanChart should show its working.
StanChart $340 mln settlement puts NY on the spot 14 Aug 2012 It’s a costly, but manageable, way for the UK bank to move on. It feels like a climb-down for NY regulator Benjamin Lawsky, though, who claimed the bank was a $250 bln Iran-loving rogue. Fellow watchdogs will be off his back, but banking in NY may now carry more frictional costs.
Citigroup CDO judge’s chutzpah admirable if doomed 14 Aug 2012 Jed Rakoff filed a feisty rebuttal to claims he overreached in rejecting Citi’s $285 mln settlement with the SEC. He secured his image as a public interest champion and likely stiffened the U.S. watchdog’s spine. But he’ll rightly lose this fight, and it’s time to move on.
Besieged StanChart needs governance booster 13 Aug 2012 Chairman John Peace is spread too thinly. His peers on the bank’s board, some of whom have been around too long, lack financial oomph. A stronger board wouldn’t have prevented the attack by the New York regulator, but it might help the UK bank recover more quickly.
Uncle Sam seeks to dance around own rules in Sudan 10 Aug 2012 The U.S. wants $3.5 bln for the African nation following a recent oil pact with its southern spinoff. But that could contravene 1997 sanctions, exposing aid providers and investors to a StanChart-like zap. It would be far better to just adopt a new policy altogether.
UK interest in hybrid Libor is on the right track 10 Aug 2012 Preparatory work on reform of the scandal-wracked interest rate suggests that both ways of setting the benchmark - guesswork and real data - have flaws. British regulator Martin Wheatley seems to favour a dual system. Throw in better oversight, and he might be on to something.
Exclusive: StanChart threat rings Fed alarm bells 9 Aug 2012 New York’s possible revocation of Standard Chartered’s Wall Street license has bank regulators donning their macroprudential jumpsuits. The worry is that Benjamin Lawsky’s surprise risks unsettling customers and depositors. It’s getting hard to tell who the rogue is here.
Atomic halt leaves U.S. short on energy options 8 Aug 2012 A regulator is refusing to approve new reactors until there’s a plan for storing nuclear waste. With proposals to shutter a tenth of coal capacity, loud protests over gas fracking and little support for green tech, America seems to favor a none-of-the-above approach to energy.
Standard Chartered selloff has gone far enough 8 Aug 2012 Accusations of sanctions busting and a threat to its New York licence wiped almost a quarter off the bank’s market value. StanChart’s squeaky-clean reputation will be hard to regain. But emerging market growth - and perennial takeover speculation - should support the shares.
StanChart anti-U.S. rant will resonate 8 Aug 2012 The reported denunciation of “f—ing Americans” shows a disrespectful attitude to the U.S. ability to impose financial rules well beyond its own borders. It’s hard to fight against the economic superpower, but the cavalier U.S. approach could eventually be self-defeating.
StanChart can’t avoid the long arm of the Lawsky 7 Aug 2012 The New York state regulator threatens to yank the bank’s license over claims it hid Iranian transactions. It’s a brash move that grabs the spotlight from federal enforcers like the DOJ. But if StanChart wants to do business on Wall Street, it has to play by local rules.
StanChart sanction crisis poses cultural questions 7 Aug 2012 The bank strongly rejected a U.S. regulator’s claim it hid $250 bln of payments for Iranian clients. But communications quoted in the probe suggest an arrogant, dissembling culture. With StanChart’s top team little changed since then, the burden of proof lies with the bank.
StanChart joins banking march into mire 6 Aug 2012 New York regulators accuse the UK-based lender of covering up $250 bln of sanctions-busting transactions with Iran. It’s a big setback for one of the last global banks to have dodged financial and legal woes. Even just a fine for StanChart will leave the industry lacking halos.
U.S. banks loath to kick even soft crisis drug 31 Jul 2012 Community banks are pushing to extend a crisis program under which the FDIC insures $1.5 trln of deposits without limit. Yet the program helps concentrate risk, distorts funding costs and brings outsized benefits to bigger banks like JPMorgan. There’s every reason to let it die.
Superhero movie duel shows China needs new script 30 Jul 2012 Pitching Batman and Spider-Man head-to-head in theatres looks like a cynical plot to cut their audiences. That’s no way to nurture homegrown studios. Censorship may prevent China from making great films, but by playing fair it can at least learn how to make super-profitable ones.
Worst global Dodd-Frank fears start to take shape 30 Jul 2012 The Swiss are balking at new U.S. derivatives rules, the first overseas authorities to sound off about them. But U.S. watchdogs want foreign arms of domestic dealers to follow the new plan. If global regulators won’t sign up, however, it will create an unlevel playing field.
Ills of offshore stashes matched by state hoarding 25 Jul 2012 Over $12 trln was held in the top tax haven private banks in 2010, a 63 pct increase from 2005, says a new study by an advocacy group. Meanwhile, central bank foreign exchange reserves grew twice as fast. Bad policy fueled both and helps explain sagging economies.