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.
U.S. Dodd-Frank Act hits the terrible twos 20 Jul 2012 The landmark financial regulation’s second birthday marks a new phase as some of its most important rules soon take effect. The Act’s usual opponents will keep plotting infanticide. But smothering the boisterous toddler won’t be easy politically or logistically.
Romney’s company tax plan may flood U.S. with cash 18 Jul 2012 The Republican candidate wants to tax corporations only on their U.S. income. If he wins the White House, it seems Congress might just go along. Such a change would encourage U.S. companies to repatriate up to $1.4 trln held offshore to avoid tax under the current global regime.
Purge likely after U.S. obesity drug binge 18 Jul 2012 Two drugs for weight loss from biotech firms have been approved by the FDA in the last month. With American obesity rates rocketing, analysts are eyeing fat sales and bankers are weighing mergers. But history suggests the enthusiasm may last about as long as the typical diet.
China investors get wise to a new four-letter word 18 Jul 2012 Really it’s an acronym: VIEs. These are the structures used by half of Chinese firms listed on the Nasdaq to get around restrictions at home. The SEC’s probe of New Oriental Education may sound their death knell. In the end, that’s probably best for investors - and for China.
U.S. senators show manipulation double standards 17 Jul 2012 At Ben Bernanke’s appearance on Tuesday, they loudly denounced bank skullduggery to fix Libor rates. Then came demands for Fed market intervention to create U.S. jobs. The latter is at least clearly legal, but it has far more potential to damage markets for the long term.
City of London watchdogs roughed up over Libor 17 Jul 2012 The Bank of England governor and the FSA chairman each took a blow in the latest parliamentary hearings into the rate-fixing scandal. But MPs still failed to ask a key question. The central bank’s Court may need to take over the role of inquisitor.
What if banks boycott Libor? 17 Jul 2012 The Barclays scandal is prompting banks to rethink their role in setting interest rates. But a mass boycott of Libor could throw markets into a tailspin. Regulators need to decide urgently how the benchmark for hundreds of trillions of dollars of contracts should be reformed.
Libor jailbirds would be hollow symbols 16 Jul 2012 Rate-rigging sentences might assuage public lust for Wall Street scalps. But U.S. prosecutors have missed big on financial-crisis villains. Al Capone was nailed for tax evasion. Libor convictions would also miss the point - and might only get real banksters’ distant cousins.
Scottish soccer’s own goal sets example for banks 13 Jul 2012 Glasgow’s Rangers soccer club wasn’t too big to fail - the Scottish Premier League ejected it for reckless financial behaviour. The authorities must now choose how far down to relegate the side. Like financial regulators, they should fight hard against moral hazard.
Europe’s bank recap strategy has reached its limit 11 Jul 2012 The continent’s lenders have bolstered capital buffers by 94 billion euros since September, ahead of regulatory targets. Yet funding markets remain closed and confidence is scarce. Rebuilding trust now depends on cleaning up loan books and solving the euro zone’s sovereign woes.
Tucker bloody but still standing post Libor ordeal 9 Jul 2012 The Bank of England deputy convincingly denied political pressure prompted Barclays to rig interbank rates. But his explanation lacked clarity, and he was pummelled for not heeding earlier warnings. The encounter has somewhat damaged his chances of taking charge of the BoE.
Euro bank supervision could stir up hornets’ nest 5 Jul 2012 The last EU summit promised to break the vicious circle between banks and sovereigns; create a single supervisory mechanism for the industry involving the ECB; and let the ESM recapitalise banks. Grand statements so far. Filling in the details will require multiple battles.
Libor rigging looks like victimless crime 29 Jun 2012 Barclays’ deception is bad for the banking industry, but the artificial quotes probably didn’t significantly distort borrowing costs or the economy. There may have been big losers in this scandal, but they aren’t likely to be found too far afield from other banks’ trading desks.
UK mis-selling case adds to anti-bank frenzy 29 Jun 2012 Britain’s regulator has slapped lenders for flogging interest rate hedges to unsophisticated small businesses. Compensation claims will be another drag on earnings, while new business will be squeezed. Amid the furore over rigging interbank rates, it’s another reputational blow.