Watchdogs adopt smart pragmatism on swaps trading 18 Apr 2012 The SEC and CFTC are whacking up the volume threshold for being dubbed a dealer to $8 bln. That 80-fold increase might seem like they’re caving to industry pressure. But it’s a more realistic level that will let the market function while still ensnaring the market’s big players.
Bank dominoes need to be better spaced 17 Apr 2012 Many were in danger of toppling after Bear and Lehman fell. Limiting their exposure to a single counterparty, as Dodd-Frank does, should help prevent another similar chain reaction. Big banks may not like it but this too-interconnected-to-fail measure is worth implementing.
Obama’s oil speculation plan is mercifully mild 17 Apr 2012 Under fire for high gas prices, the U.S. president has executed a masterful trade. Giving regulators extra leeway to clamp down on risk-taking investors won’t cut the cost of driving, which is up for other reasons anyway. But it should placate voters without hurting markets.
Brazilian billionaire banker tests investor mettle 16 Apr 2012 Just days ahead of an IPO of his BTG Pactual, Andre Esteves has been fined for insider trading by Italian watchdogs. The firm shrugged off the case and says the boss will appeal. But JPMorgan’s Ian Hannam resigned to fight similar charges. The risks look big for this high-flyer.
Maybe banks needn’t overly fear new U.S. watchdog 16 Apr 2012 Crass resistance to the Consumer Financial Protection Bureau looks even more overblown following one of its first big proposals. The agency will crack down on deceptive practices on riskier loans but is OK with banks charging fees for them. That strikes a reasonable balance.
If Apple, publishers plotted they didn’t need to 11 Apr 2012 U.S. trustbusters say Apple and e-book producers conspired to raise download prices. But the model they came up with makes sense even without collusion. It gives publishers a better chance of survival. And if readers pay a bit more, at least it means books will keep coming.
Singapore may not escape India’s offshore tax grab 10 Apr 2012 The country’s tax crackdown is likely to prompt an exodus of investors from Mauritius. Some are already shifting their operations to Singapore. The city state is a better established financial centre. Nevertheless, the very act of hopping islands may look like tax avoidance.
D.C. holds $23 bln fix for cash-strapped states 4 Apr 2012 That’s how much they could raise from taxing online retailers. A pre-Internet ruling currently forbids such tariffs, forcing states like Georgia to resort to contorted ways around it. A federal solution is needed. Luckily, Congress may have hit on one that even Amazon supports.
Who will fill Ian Hannam’s shoes? 4 Apr 2012 The JPMorgan banker’s resignation leaves a hole in the London market. Candidates to fill it are rival investment banks and Hannam himself, assuming he clears himself of market abuse charges. But it’s also possible that some of the business he generated just won’t come to London.
JPM insider non-trading case puts banks on notice 3 Apr 2012 Britain’s regulator has fined Ian Hannam for sharing price-sensitive information about a client. The penalty looks harsh since the JPMorgan dealmaker’s slip was accidental and nobody traded on the tip. Even if Hannam wins his appeal, advisers may have to re-think how they work.
Bank of England pressured by Treasury mea culpa 30 Mar 2012 The UK finance ministry has published an internal report criticising its handling of the crisis. Following the Financial Services Authority’s multiple exercises in self-flagellation, the central bank’s continued refusal to publicly examine its own performance looks unsustainable.
U.S. energy debate has little to do with economics 27 Mar 2012 President Obama’s call to end big oil’s tax credits is mere political theater. Another $4 bln in tariffs for the industry won’t cure the deficit - and these firms do pay a fair whack already. But the counterargument that scrapping them will drive up gas prices is just as dubious.
Volcker Rule remedy a decent compromise 26 Mar 2012 A bipartisan group of lawmakers wants to give regulators more time to figure out the complexities of banning prop trading. Their genuinely practical one-page fix is a rare treat from chambers famous for partisan bickering - assuming the senators can get it passed.
Bank bailout views skewer GOP star’s credibility 23 Mar 2012 Paul Ryan’s new budget takes bold steps to shrink U.S. debt, but makes a troubling error. He suggests that Dodd-Frank’s new mechanism to wind down big banks will cost taxpayers and spur bailouts. This misstep casts doubt on his ability to favor practical solutions over politics.
UK’s bubble-prickers seek iron grip on banks 23 Mar 2012 The new Financial Policy Committee wants mega powers to prevent future excess, including controlling capital ratios and reining in insurers and fund managers. It’s clear the FPC will have muscle. The snag is that it has few ideas for solving the current problem: risk aversion.
EU eases insurers’ worst capital fears – for now 21 Mar 2012 The European Parliament has accepted that British insurers need protection from the EU’s sprawling new regulatory framework. That’s a relief. But the Solvency II rules could yet have unpleasant consequences. The likes of Pru could still move their headquarters away from Europe.
Banks need to take the guesswork out of Libor 15 Mar 2012 Probes into alleged manipulation of the benchmark interest rate have exposed a crucial flaw: sometimes it’s based on an educated guess. That won’t restore confidence in a figure that underpins $360 tln of loans and derivatives. A better approach would be to use real transactions.
Fed strikes right balance with latest stress test 13 Mar 2012 Unlike the last look under the hood, investors have been given reams more useful data to separate sheep from goats in U.S. finance. At the same time, the Fed’s acting prudently to ensure capital adequacy across the system. It’s a sensible way to head off another financial crisis.
Big banks don’t face daunting new world alone 12 Mar 2012 Though U.S. lawmakers aimed much of their firepower at institutions deemed too big to fail, smaller lenders were caught in the crossfire. As the nation’s legions of community bankers gather in Nashville, they’ll grapple with similar regulatory and economic challenges.
Fortune 500 plays tough for home-court advantage 7 Mar 2012 Weary of fighting shareholders in multiple states, big U.S. companies want to force M&A lawsuits into their preferred forum, Delaware. But investors deserve a say in the matter. Deal lawyers and bankers will give the hot-button issue a hearing at their annual New Orleans confab.