Regulation

UK shouldn’t go for unilateral bank tax

22 Mar 2010

All political parties want to tax the UK's largest lenders. But a levy only makes sense if it is coordinated with other large countries and specifically targets risky shortterm funding. A goitalone strategy could simply prompt British banks to move elsewhere.

Russian 4G tenders aid unwelcome state expansion

22 Mar 2010

All but one of 40 licences just awarded for 4G telephony in Russia have gone to Svyazinvest, the inefficient state telecoms dinosaur. Svyazinvest's expansion is part of a deliberate policy that bodes ill for a sector that had been benefiting from the injection of competition.

UK bank tax could raise up to 3.6 bln stg a year

22 Mar 2010

The exact sum would depend on which parts of the balance sheet are taxed and what rate is used. But one thing is clear: as a proportion of earnings, RBS and Lloyds would be hardest hit for the simple reason that their earnings power is lower than Barclays and HSBC.

Goldman should show the way with lower pay

22 Mar 2010

The bank's decision to accrue pay at 49 percent of revenue in the first half of 2009 set off a chain reaction that led to windfall taxes and a regulatory backlash. To stop 2010 also being poisoned by a row over bonuses, Goldman should accrue only modestly for the first quarter.

Benign U.S. inflation report is pause, not break

18 Mar 2010

February s flat CPI index stemmed from a price dip for energy and the stronger dollar. Global stimulus and a rising U.S. trade deficit should reverse both soon. Wages are still under pressure, but higher costs for commodities, energy and capital will keep inflation ticking up.

U.S. Congress needs new financial regulations, too

18 Mar 2010

A top aide to Senate Banking Committee Chairman Chris Dodd traded financial stocks during the crisis. The trades were apparently allowed, but look dodgy. With so much marketsensitive activity going on in Washington, it's time to toughen up Capitol Hill's investing rules.

Lending cap may be needed to prevent next boom

18 Mar 2010

Western policymakers agree on the need to spot and prick future financial bubbles. But as the FSA's Adair Turner rightly points out, tweaking banks' capital ratios will not be sufficient to prevent excesses. Regulators may also need powers to stop people from borrowing too much.

Manipulator label could ease China-U.S. relations

17 Mar 2010

The U.S. Treasury Department may finally tag China a currency manipulator next month. Beijing may not rejoice, but should be neither shocked nor angered. The likely alternative is protectionist laws from Congress. And the label brings negotiations first, sanctions only later.

Reform’s steely knife points at Goldman and Morgan

16 Mar 2010

Wall Street s closest link to Hotel California lyrics had been the indulgent pink champagne. But a plan to overhaul financial regulation brings a new slant. The two firms could check out as bank holding companies but not leave the Fed s embrace. That s the way it should be.

Fed ‘extended period’ may not be such a long time

16 Mar 2010

Retaining ultralow rates for a really extended period could depress savings rates, quash small business lending, boost inflation and increase dependence on foreign capital. If unemployment numbers trend better, rates could start rising sooner than the Fed's language suggests.

Dodd’s faith in Fed logical but may be tested

15 Mar 2010

The senator s latest bash at reforming U.S. financial regulation hands broad prudential authority to the Fed, with input from a council of regulators. Such a mix, with appropriate teeth, stands a decent chance of improving systemic oversight, but it won't be watertight.

Wind-down powers helpful if applied with resolve

15 Mar 2010

To avoid the next Lehman or AIG, the new Dodd bill gives regulators powers to liquidate all big financial firms, not just banks. This resolution authority should be a useful addition to watchdogs toolkit provided they aren t tempted to keep firms afloat rather than use it.

Lehman exposé leaves little faith in watchdogs

15 Mar 2010

As Congress embarks on regulatory reform, it s worth noting the failings of the Fed, SEC and Treasury in overseeing Lehman near the end of its life, as catalogued by Lehman s examiner. Ironically, only the soontobeextinct OTS made much of a stab at bringing Lehman to heel.

U.S. financial reform finally moves forward

15 Mar 2010

Critics will highlight the limits of the bill emerging in the Senate. Indeed, a yearlong delay has produced a less radical document as the oncesick patient has healed. Yet key issues are addressed in substance. The proposal provides an effective roadmap for further progress.

Friday arrives early for latest FDIC bank seizure

12 Mar 2010

The agency charged with closing U.S. banks rarely pulls the trigger outside of Fridays. When it does, as with Thursday s shuttering of a bank with a branch across the street from the New York Fed, or the 2008 collapse of WaMu, it s usually under exigent circumstances.

Lehman report further vindicates short sellers

12 Mar 2010

Concerns over dodgy accounting raised by David Einhorn and others turn out to have been wellfounded. The shorts were the messengers that came closest to the truth. Those intent on squashing short selling risk removing important if uncomfortable views from the market.

Bubble-pricking regulators? China shows the way

12 Mar 2010

Those debating how to rein in future financial excesses in the West should look at China. Its policymakers guide banks for the good of the whole system. State ownership and closed borders explain much of their success but other nations could still learn a thing or two.

How Europe can avoid hedge fund overkill

11 Mar 2010

European leaders are finalising regulations on hedge funds and private equity. Despite some changes, the directive could still undermine the fund management industry and reduce choice for European investors. Here is some advice for Europe's lawmakers on how to limit the damage.

Report escalates Lehman ineptitude to new level

11 Mar 2010

A damning court exam of the firm's collapse makes CEO Dick Fuld and his lieutenants appear even more out of touch than first appeared. Balance sheet shenanigans may land them and auditor Ernst & Young in court. The exposé is also the best guide yet to prevent future failures.

Doubling U.S. exports will take more than rhetoric

11 Mar 2010

President Obama s goal of doubling exports in five years requires market opening, not just subsidies and new bureaucracies. If he yields to protectionism on trade, agriculture and antidumping matters, global trade will decline most likely taking U.S. exports down with it.