Regulation

G20 will not fracture despite many divisions

25 Jun 2010

The nations represented in Toronto are split in many ways: fiscal policy, level of wealth, demographics, as exporters and importers of resources. But all the leaders crave peace and prosperity above everything else.

U.S. financial reformers hang tough to bitter end

25 Jun 2010

Even at the final hour, big banks hoped Congress would pull its best punches. But the regulatory reform bill agreed early on Friday by House and Senate negotiators lands solid blows. Though no knockout, it looks set to constrain Wall Street banks' risktaking and profit.

Oil-drilling moratorium remains justifiable

23 Jun 2010

The more the Gulf spill looks like BP bungling, the harsher it may seem to punish its peers. But Obama s drilling pause still makes sense despite hitting a legal snag. Oil groups need better spill plans and the regulator an overhaul. A little less crude is a small price to pay.

U.S. budget cut ideas still too partisan

26 May 2010

Neither party is yet ready to make necessary cuts in America s huge social insurance programs. But that doesn't mean other spending can't be pruned. Republicans think they've found some candidates. But their list would be more credible if it didn't target just Democrat favorites.

U.S. reforms will nick, not nuke, big banks

20 May 2010

The end of the Senate s debate over financial reform came just in time for Wall Street. The bill got tougher as the talk dragged on. But it could have been worse. While banks future activities and profitability may get pinched, their core business model appears intact.

Ten percent rule for U.S. stocks looks too narrow

19 May 2010

The flash crash in U.S. stock markets scared regulators and stock exchanges. Revamping marketwide circuitbreakers makes sense, but putting narrow limits on individual stocks may be overkill. The goal should be to stop crashes, not interfere with legitimate trade.

EU hedge fund rules headed for sensible compromise

18 May 2010

Finance ministers have voted for a harsher version of the controversial hedge fund directive than the European Parliament. The industry won't welcome either option. But with EU commissioner Barnier siding with Parliament, a reasonable deal could be reached by the summer.

Credit rating proposals both funny and serious

14 May 2010

Al Franken has fans. Yet lawmakers shouldn't take the comedianturnedsenator's amendment to financial reform legislation too seriously. It would embed government more deeply in ratings. Luckily Senator George LeMieux s plan which would do the opposite is popular too.

Chavez drops nuance of financial reform

14 May 2010

Venezuela s president threatened to shut down brokers, or the rich moneybags practicing a savage capitalism that has undermined the bolivar. The rhetoric may only be a little more extreme than populists elsewhere. Aping Chavez s policy, however, would be far more dangerous.

Why Russia is right to consider capital controls

12 May 2010

Four years after abolishing currency controls, Russia is mulling new measures to restrain shortterm capital inflows. That may not be a bad idea: research by the IMF shows that limited controls can work. But they are no longterm substitute for sound macroeconomic policies.

American bank failures pump up deal flow

12 May 2010

Vulture investors like Wilbur Ross and local community bankers aren't alone in cashing in on rising FDIC bank seizures. While M&A remains broadly in the doldrums, a small coterie of investment bankers and advisers outside the bulge bracket is minting fees from the banking crash.

Fed audit should be embraced not feared

11 May 2010

Call it an autopsy rather than an audit. Instead of vetting monetary policy, U.S. financial reform will instead require an investigation into the bank's performance during the financial crisis. Ben Bernanke won't like it, but it could create a better Fed.

Japan flirts with becoming Greece of the East

11 May 2010

Even the finance minister only aspires to hold borrowing next year at this year s levels. But Japan s legendary household and corporate savings are on a downward trend. Domestic savers have long been forgiving of the government s overspending; other investors will be less so.

Credit rater Moody’s is down, but hardly out

11 May 2010

Investors sent its stock down 7 pct on Monday. They are right to be nervous the SEC's investigation threatens the company's businesses. But unless there's a fundamental change in the whole system of credit ratings, Moody's may be more resilient than shareholders think.

Voters are ignoring avoided costs of bailouts

10 May 2010

Elections have taught a U.S. senator and Angela Merkel's party in Germany the same lesson: Taxpayers loathe bailouts, whether of banks or nations. But opponents of such rescues need instruction, too in the costs of the panic and destruction that would otherwise have ensued.

Goldman’s trading – if not timing – is perfect

10 May 2010

The firm cemented its elite status by not losing money in any single Q1 trading day. But the milestone was overshadowed, at least in the market, by an accompanying laundry list of litigation warnings. The better Goldman gets, the worse it looks. It should be a temporary anomaly.

Banks, regulators need reality check on risk math

10 May 2010

The credit crisis would have been less bad if risk had been managed better. Unfortunately, many financial firms and watchdogs use mathematical models that grossly underestimate tail risk. It can seem an arcane debate, but it matters and improvements are fairly easy to make.

U.S. role in EU bailout not without cost

10 May 2010

In reopening swap lines to other central banks, the Fed has made another openended commitment to grease the wheels of banking, particularly in Europe. Containing debt contagion is worthy, but such interventions have downsides including potential inflation and moral hazard.

Flash crash brings no answers, just questions

7 May 2010

U.S. equity markets are among the most scrutinized anywhere, yet a day after a stomachchurning bungee jump in prices there's still more fingerpointing than explanation. The episode raises crucial questions about superfast trading, exchanges and market structures in general.

Investor assault on Transocean looks like overkill

6 May 2010

Deep sea driller Transocean has justly been set in the stocks alongside BP over the spill. But bashing the rig owner more brutally than BP, as investors have done, seems odd. A $6 bln slide in value looks excessive for a wellinsured firm with strong prospects.