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Government & Agencies

Deposit guarantees are the new Jedi mind trick

22 Mar 2023

Savings in US banks are safe, say Fed chief Jay Powell and Treasury Secretary Janet Yellen. If depositors believe them, they’re right, and confidence in the system should bounce back. The catch is that risk-free banking isn’t theirs to give. Even if it were, the cost is high.

Fed’s self-scrutiny starts off on the wrong foot

22 Mar 2023

Supervisory tsar Michael Barr is leading a probe into Silicon Valley Bank’s collapse. But the Federal Reserve’s tangled, partly centralized structure makes it ill-suited to conduct a warts-and-all review of its supervision. Banks don’t police themselves; the Fed shouldn’t either.

Benefits of US political accord accrue to TikTok

21 Mar 2023

The short-form video platform’s CEO will appear in front of Congress this week. Backlash towards its Chinese parent ByteDance is one place politicians can agree. American media steals eyeballs when its citizens argue. TikTok, then, has an interest in keeping events copasetic.

China sanctions red line has shifted westward

21 Mar 2023

President Xi Jinping’s visit to Moscow has rekindled concerns Beijing could get too cosy with Vladimir Putin. Arming Russia would likely trigger a joint Western diplomatic response even in the absence of a Chinese invasion of Taiwan. Beijing is walking a thinning tightrope.

Signature Bank buyer gets a crisis dividend

20 Mar 2023

US watchdogs tend to give bank mergers a tough time until a lender hits the skids. New York Community Bancorp’s stock jumped 39% after getting a lightning-fast nod to snap up chunks of its failed rival for a song. Regulators can be principled or fast in a crisis, but rarely both.

Economic asphyxiation puts Russia in China’s orbit

20 Mar 2023

Moscow needs up to $90 bln to fund its budget deficit this year. As sanctions keep biting, financing the shortfall will slowly add to the economy’s woes. Russia’s need to use the yuan for trade and payments will also increase Vladimir Putin’s dependence on Beijing.

UBS salvages most value from Credit Suisse wreck

19 Mar 2023

The Swiss bank is scooping up its ailing arch-rival for just $3.2 bln in a state-arranged rescue. In return for shoring up confidence it gets a balance sheet backstop, a competition waiver, big savings and a giant capital boost. It also becomes bigger and more systemic than ever.

EU and US green arms race misses bigger picture

16 Mar 2023

The European Union’s response to Joe Biden’s Inflation Reduction Act gives member states leeway to push back with their own green subsidies. Yet plans for production targets are misguided. To decarbonise while managing China risks, it’s better to seek common ground with the US.

Capital Calls: BlackRock and ESG, UK pensions

15 Mar 2023

Concise views on global finance: Bank ructions and inflation give Larry Fink, boss of the $8 trln asset manager, cover to talk about something other than climate change in his annual letter; Britain’s abolition of a retirement tax threshold is an expensive way to help the rich.

UK fiscal austerity may not survive next election

15 Mar 2023

Finance minister Jeremy Hunt used 24 bln pounds of budget headroom to boost investment and incentives to work. He also set a trap for the opposition: accept spending cuts after 2024 or be tagged as a high-tax party. Labour Party leader Keir Starmer doesn’t have to take the bait.

SVB proves even smaller banks are too big to fail

15 Mar 2023

It’s 15 years since Bear Stearns showed large-scale failure is contagious. Yet US regulators still struggled with the collapse of a group half its size. If buyers cannot come to the rescue and depositors won’t bear any risk, then even lesser groups will need more protection.

The Fed giveth, taketh away, giveth again

13 Mar 2023

The Federal Reserve helped to backstop failed Silicon Valley Bank. But it was the central bank’s easy money, followed by a sharp surge in interest rates, that pushed the lender to the brink. Other dangers for banks lurk. But with inflation high, the Fed is running out of tools.

UK growth demands better-directed fiscal fireworks

13 Mar 2023

Finance minister Jeremy Hunt’s March 15 budget may feature 30 bln pounds of headroom to ease headaches like workers’ pay. But Britain’s real malaise is a lack of long-term business investment. To keep pace with foreign largesse, Hunt needs to deploy significant tax breaks.

Biden budget misses opportunity to aim low

9 Mar 2023

Seasoned negotiators often set a lofty target, then offer small concessions. The US president’s budget follows that strategy. But Republicans won’t play ball. A more modest plan – including spending cuts – would have been harder to reject out of hand, and saved valuable time.

Jamie Dimon throws Staley off fortress battlements

9 Mar 2023

JPMorgan is seeking to claw back eight years of pay from former executive Jes Staley, over links to sex offender Jeffrey Epstein. Suing former employees isn't a great look. But the bank, and its CEO Dimon, have been on a high. As reputations go, JPMorgan has ever more to defend.

In praise of American finance’s regulatory mess

9 Mar 2023

China’s plan to create a super watchdog leaves the US looking more like a global outlier. Its improvised tangle of agencies has drawbacks, as the 2008 crisis and crypto boom demonstrate. Even so, the rats-in-a-sack approach might be the least bad way to run a financial system.

China’s equity watchdog gets backhanded promotion

8 Mar 2023

Beijing is elevating the China Securities Regulatory Commission in the bureaucratic hierarchy. It ought to be good news for an agency whose authority has been diluted in recent years. Yet the change sets staff up for a pay cut. More power with less money is a bad combination.

Malaysia can move on from billion-dollar-whale hunt

8 Mar 2023

Kuala Lumpur is closer to recouping all debt from the 1MDB scandal after Abu Dhabi’s $1.8 bln settlement. Some mopping-up remains, though a punt to wrangle more out of Goldman Sachs looks a long shot. It’s time to draw a line under the ugly sovereign wealth fund saga.

Elizabeth Warren leads cavalry into deal battles

7 Mar 2023

The Democratic senator urged the Transportation Department to join DOJ efforts to stop JetBlue’s $4 bln plan to buy rival Spirit. She also encouraged the FCC to crack down on Tegna’s sale and the OCC on TD-First Horizon. These odd interventions push trustbusting to new extremes.