Regulation

UK banks won’t quake at new stress test

10 Mar 2010

The UK regulator is imposing a new balance sheet test on banks, barely a year after the last health check. Lenders probably have enough capital to meet the FSA's modestly tougher doomsday scenario. The real problem is that some are still hooked on central bank liquidity support.

An EMF could solve euro’s principal conundrum

9 Mar 2010

If the political obstacles for creating it can be overcome, a European Monetary Fund might be just what the euro zone needs. A fund run by stern central bankers who focused only on countries in difficulties could overcome the zone's structural lack of fiscal policy coordination.

Pandit deftly manages taxpayer-shareholder balance

4 Mar 2010

The Citi chief performed well in his latest congressional inquisition articulating a backtobanking basics strategy that should please his dual masters in the market and in Washington. But to fully succeed, Pandit needs to get Citi stock up and the government out.

Goldman Sachs needs to admit it made mistakes

26 Feb 2010

The investment bank still implicitly defends its controversial 2001 Greek currency swaps just as it has rebuffed other crisisrelated criticism. The deal was legal, but ethically questionable. Goldman should acknowledge it compromised the principles it s meant to hold dear.

Bears dodge a regulatory bullet

24 Feb 2010

Public griping aside, short sellers believe new SEC rules will do little to crimp their strategies. Curbs on shorting when a stock falls 10 pct in a day won t be hard to sidestep, meaning overvalued companies can t hide. That s not just good for bears, it s good for markets.

America’s small bank problem looks manageable

23 Feb 2010

True, the FDIC s list of troubled banks surged by 27 pct in Q4 to 702. But the agency looks to have sufficient cash to tackle the problem as long as toobigtofail institutions are excluded. So there s no financial excuse to dillydally over exterminating zombies.

FDIC on back foot thanks to imperfect disclosure

16 Feb 2010

A web video critical of the U.S. agency's sale of failed IndyMac Bank has elicited a defensive clarification. FDIC could have been clearer when the deal was done. As with the AIG bailout, authorities dabbling in the private sector court skepticism if they don't disclose enough.

China finds command economy levers hard to juggle

12 Feb 2010

An unexpected increase in the bank reserve requirement may be mostly technical, but it also reflects the strains of China's successful economic nationalism. The government wants stable growth without employment shocks or much inflation. That could be too much to ask for.

Factional chaos imperils U.S. financial reform

12 Feb 2010

On the surface, there is fresh momentum. Democrat Chris Dodd, who heads the powerful Senate Banking Committee, has found a negotiating partner in Bob Corker, an eager freshman Republican. But the disruptive new pairing creates at least as many problems as it appears to solve.

FirstEnergy highlights challenges of utility M&A

11 Feb 2010

At first blush, the Ohio energy group's $8.5 bln purchase of Allegheny looks like a winner, with huge cost savings to harvest. But factor in the pounds of flesh that regulators will want to extract, and it may not be worth the trouble.

Fannie/Freddie predictably late tackling bad loans

11 Feb 2010

The U.S. mortgage giants plan to buy $200 bln of seriously delinquent loans out of securities they guarantee. It's about time. The trouble is that rather than address it sooner, the two firms have wasted money putting it off until an accounting change made it look less bad.

Fed’s self-contradiction on rates makes sense

2 Feb 2010

The U.S. central bank says it will keep interest rates low for a while. Along with other regulators, it is also warning banks to be ready for rate hikes. The messages appear mixed but policymakers need to know that when the time comes, they can lift rates without harming banks.

How can size not matter in banking?

28 Jan 2010

President Obama says he wants to end the Too Big to Fail mentality of the banking industry. But his broad proposals to reform the financial system don't actually call for reducing the size of the country's banks. This seems an odd contradiction.

Climate rules may offer little help to investors

28 Jan 2010

SEC boss Mary Schapiro's heart is in the right place in asking U.S. companies to reveal more about the threats from global warming. They may even coax businesses into better analyzing the risks. But for now, the SEC's initiative will likely just mean more boilerplate.

Bernanke needs fresh ideas for second term at Fed

28 Jan 2010

Don't expect a radical shift. But the dissent evident in the Senate vote confirming his reappointment might bring some adjustments. A greater focus on asset bubbles, government deficits and Fed independence should be on Bernanke's agenda.

Wall Street can’t escape Obama’s cross-hairs

28 Jan 2010

Jobs may be the president's number one focus but Wall Street is a close second. The State of the Union offered another sign Obama will seek to regain political momentum on the backs of bankers. Whether Congress will match this populist rhetoric with policy is another matter.

New rules lessen, don’t eliminate, money fund risk

27 Jan 2010

Proposed new U.S. regulations will boost liquidity, improve credit quality and shorten the maturities in money market funds. That's good. But the industry successfully beat back an effort to demystify the $1 NAV illusion. Without that, there's still risk in the system.

BofA Merrill takes banks a step back on bonuses

26 Jan 2010

Allowing some stock for 2009 to vest this summer breaches the spirit of curbing excessive pay. The decision is especially odd for a bank that professes a belief in deferred comp and whose last payouts caused an uproar. It also confirms Main Street's worst fears about Wall Street.

US antitrust bark appears worse than bite

26 Jan 2010

The Department of Justice's new approach to competition law was supposed to be vigorous. Yet it declined to take the Ticketmaster/Live Nation merger to court and settled for relatively minor remedies. That's not how a watchdog inspires fear.

Bernanke is least-bad choice at Fed

25 Jan 2010

Sure, the incumbent is too worried about deflation, was too weak on rates and paid too little attention to financial excess. But his work during the meltdown helped avert something much worse. He's a known quantity globally. And there is no superior plausible alternative.