Regulation

EU should resist ECB’s fiscal policy power grab

28 Sep 2010

Trichet, the ECB president, wants euro zone governments to answer his questions on fiscal deficits, and suggests a committee of wise men should monitor budgets. This goes too far. Budgetary policy is a matter of government responsibility, not central bank meddling.

UK bank probe keeps options, but route is clear

24 Sep 2010

The opening message from the commission into UK banks is that everything's on the table: GlassSteagall breakups, antitrust remedies, you name it. But while the commission has given itself latitude, it's easy to see what it should, and probably will, end up deciding.

Fed readies second mortgage on U.S. future

21 Sep 2010

Continued nearzero interest rates and the additional monetary stimulus hinted at by the Fed are meant to nurse sluggish growth. But the policy risks encouraging bad lending and corporate investment decisions. America s competitive capital edge looks increasingly threatened.

Time may have come for bank bail-in scheme

20 Sep 2010

The idea of rescuing banks with creditorenabled restructurings has been overshadowed by a slew of other plans and some resistance. Regulators are now giving bailins, which avoid bailouts, more attention. The practicalities would be fraught, but the concept ticks many boxes.

U.S. foreign tax rules look ill-conceived

20 Sep 2010

Washington wants foreign banks and brokers to help it keep track of American citizens, or face a hefty levy. Big firms will have to comply, but smaller ones may prefer to stop accepting U.S. clients. The administration shouldn't expect its lenders to be welcomed abroad.

New rules are set to squeeze Chinese lenders

17 Sep 2010

China's banks have enjoyed rapid loan growth, guaranteed margins, low bad debt and plump balance sheets. All four are under attack from new rules. Regulators want to prepare banks for a rainy day and allow more competition. Bank shares look set to struggle as a result.

Hacking row may complicate News Corp’s BSkyB deal

16 Sep 2010

Revelations about illegal eavesdropping by one of the media group's tabloids has drawn attention to Rupert Murdoch's influence in the UK. That may complicate his $19 bln plan to take full control of the payTV operator. A drawnout regulatory enquiry looks increasingly likely.

No need for Commerzbank to rush its cash call

16 Sep 2010

Germany's secondlargest bank may need to find over 13 bln euros in capital to replace government support. Earnings and balance sheet pruning will get it some of the way there, but a big share issue looks inevitable. Thanks to regulators, Commerzbank can at least bide its time.

Landesbanks may struggle even with Basel III delay

16 Sep 2010

Germany's regional lenders have been given a lenientlooking 13 years to comply with new bank capital rules. But local governments don't want to pump in more cash and weak earnings won't make up the shortfall. Balance sheet shrinkage and consolidation look the only way forward.

Obama tweaks fine print for his consumer champion

16 Sep 2010

Coming from a credit card issuer, Elizabeth Warren might not like that. But Main Street will welcome having her setting up the U.S. consumer financial protection agency. The president may not care that Wall Street feels differently. Still, the manner of his pick carries risks.

Europe risks corporate derivatives loophole

15 Sep 2010

Companies have won an exemption from European Commission rules that force derivatives trades to be cleared centrally. That's a relief for firms that depend on hedging risk. But the decision could enable nonfinancial companies to take on big positions and pose a systemic threat.

Rio and BHP steel themselves to abandon JV

15 Sep 2010

Pooling the riches of Australia's western desert, currently split between Rio and BHP, would give the duo world dominance in iron ore. But they've asked the Aussie authorities to postpone a decision yet again. The deal is on the rocks. Still, there should be relief all round.

U.S. tax debate needs deeper dive

14 Sep 2010

The kerfuffle over the expiring Bush tax cuts for the rich is great theater but a bit offpoint. Extending those reductions is unlikely to have a serious effect on the economy. The more important discussion is how to tilt the tax code to encourage investment over consumption.

Pru’s putative Chinese suitors face hurdles

14 Sep 2010

Reports of a Chineseled breakup bid boosted the UK group's shares. But pulling it off won't be easy. Offloading U.S. and UK divisions at an attractive price is one obstacle. Getting domestic financing is another, especially with a competing opportunity of AIA's public offering.

Basel buffers could be painful for Europe’s banks

14 Sep 2010

Most lenders are comfortably above the new 7 percent minimum capital ratio set by regulators. But extra reserves to dampen the economic cycle, and to make systemic banks safer, could eat up much of the excess. It's too early for banks to think about returning cash.

Tax changes drive private equity’s great selloff

13 Sep 2010

The industry is on track this year to sell more assets than it buys for the first time ever. But this isn t just about realizing cash for investors. Looming U.S. tax hikes on carry give buyout barons a compelling rationale to sell now, even if it doesn t much help their clients.

Europeans stumble on the way to fiscal discipline

7 Sep 2010

EU governments are still far from agreeing on serious ways to reform the stability pact and ensure that budget deficits will be contained within 3 percent of GDP. They're quicker to tax and regulate banks. This is the wrong message to send if they want to avoid another crisis.

Basel’s capital buffer may turn out to be a floor

7 Sep 2010

Regulators are close to setting new minimum capital requirements for banks, including a cushion that they can dip into in bad times. But if lenders view this buffer as a minimum level that they dare not breach, the new standards could be tougher than the authorities intended.

Regulatory gaps let banks off the bonus hook

3 Sep 2010

Investment banks have reined in their worst pay excesses. But inconsistent enforcement of rules in the United States and Europe means some are still getting away with bad behaviour. If banks and regulators can't agree common bonus standards, they risk another political backlash.

EU timidly moves towards better banking regulation

3 Sep 2010

European Union bodies have finally reached a compromise on the new financial regulatory framework suggested by the Larosière report eighteen months ago. The new panEuropean bodies will lack a full set of teeth, but they might still be able to help in times of crisis.