Regulation

US opens second front on credit derivatives

14 Jul 2009

The Justice Department is asking banks that own data provider Markit for information as it investigates possible CDS market abuse. Its legal options aren't clearcut, but its ability to embarrass could threaten the lightly regulated environment favoured by derivatives dealers.

Bank rhetoric partly to blame for attempts to ban CDS

13 Jul 2009

Calls to outlaw them most recently by US lawmaker Maxine Waters appear unlikely to succeed. But they re affecting the larger debate over CDS regulation. If banks had been more forthcoming earlier about default swaps true nature, they might not be in such a bind now.

US efforts to vilify energy traders might backfire

7 Jul 2009

The new head of America s commodity markets regulator plans to hold hearings on whether the agency should limit the activities of traders to curb excessive speculation . But any rules born of such a simplistic view are likely to be harmful.

US mobile crackdown promises iPhones for all

7 Jul 2009

That could be one result if antitrust investigations eliminate deals that restrict devices such as Apple s to one network. Mobile phone makers with hit products won t be happy. But the dominant network operators, Verizon Wireless and AT&T, have more to fear.

Derivatives exchange rules may tip US/Europe scale

6 Jul 2009

The EC and the US Treasury are pushing new regulations for unlisted products. Both are being cagey about whether they ll force these derivatives onto exchanges. If they do they must coordinate their rulemaking carefully to avoid a flurry of jurisdiction shopping.

US consumer watchdog will have stretchable leash

1 Jul 2009

Obama s proposed Consumer Finance Protection Agency won t have the broad, unchecked power that bankers feared. But it could still make their lives difficult, especially if the president appoints antiWall Street militants to the board. That s a significant risk.

Ditching debt guarantees leaves many banks in a hole

30 Jun 2009

The likes of JPMorgan and Morgan Stanley have sworn off the FDIC programme that probably kept a number of banks afloat and may have saved the sector as much as $36bn in financing costs. But unguaranteed debt is still too expensive for most to fund their businesses profitably.

AIG shares rise 20-fold, but directors matter more

30 Jun 2009

The giant US governmentsupported insurer will again have stock trading in the $20s but only because of a reverse stock split. More importantly, a fresh slate of directors brings a range of potentially useful skills. With luck, they can help recoup taxpayers sunken treasure.

Can financial products be regulated like drugs?

29 Jun 2009

The Bank for International Settlements says they could be overseen the same way, with safe ones widely available, risky ones doled out carefully and new ones subject to rigorous tests. The trouble is, safety can be hard to judge. BIS must also press for better disclosure.

US sprinkles new acronyms on regulatory landscape

17 Jun 2009

President Obama wants to make financial products easier for most people to understand. Too bad he isn t doing the same for financial oversight. His reform plan expands the already mindnumbingly complex crazy quilt of US regulatory agencies.

US plan for securitisation risk misses the point

16 Jun 2009

The market could benefit from some changes. But forcing lenders to keep 5% of what they securitise is a red herring. Subprime lenders, as well as plenty of banks that have failed, did have skin in the game. But that didn t keep them from taking outsized risks.

No bombshells in US pay guidelines

10 Jun 2009

The rules from Treasury boss Geithner are refreshingly sensible, even dull: no pay caps or other Draconian measures. The key innovation ensuring compensation committee directors are independent is welcome. But it s down to a slightly tarnished regulator, the SEC, to enforce.

US taxpayer makes decent return on Tarp – so far

9 Jun 2009

The bailout was meant to restore faith in banks. Yet the state has made a profit on the first $68bn being returned by banks. But those are the portfolio s winners. Net off the losses from the likes of AIG and Citi and the government will struggle to stay in the black overall.

US oversight of two-time bailees’ pay is sideshow

8 Jun 2009

The government effectively runs doubledipping Tarp losers like AIG and Citi anyway. The rules and regulatory powers governing financial pay in general are of greater importance. That means avoiding micromanagement and setting clear, enforceable guidelines on pay structure.

Geithner still has too many balls in the air

8 Jun 2009

The US Treasury boss has backpedalled on some plans to make massive structural changes to financial oversight. But extensive, nettlesome issues remain. Obama s team should be trying to rein in expectations and set politically tenable goals before unveiling proposals next week.

Right principle, wrong principal

19 May 2009

US banks still need lots of capital and private equity has money to put to work. Private equity shops are bidding for a Florida bank and one firm is buying a Michigan bank. But US regulators still don t love these matches, Robert Cyran and Richard Beales explain.

US investors don’t need a Shareholder Rights Act

18 May 2009

Many elements of the bill being introduced in the US Senate are laudable: say on pay, an end to staggered boards and separation of the CEO and chairman roles. But shareholders are already tackling these matters themselves. A blunt act of Congress is the wrong way to proceed.

Google/Apple antitrust probe is warning shot

5 May 2009

The US is investigating whether it s anticompetitive for the two technology leaders to share board members. It s easy enough to end the overlap. But that probably wouldn t be the end of it for Google. The new administration looks ready to take a tougher line on competition.

US insider trading case could weaken CDS critics

5 May 2009

Regulators charged two people with fraudulently reaping $1.2m in the credit default swap market. It s the first US insider trading case involving these instruments, and if prosecuted successfully, it would demonstrate that the CDS market isn t entirely lawless.

Inefficient financial regulation has its charms

22 Apr 2009

That s the position of US state insurance watchdogs, who oppose the federal government s attempt to gain oversight of the industry. The feds say the state system is outdated and hampers innovation. Experience suggests that s not entirely bad, argues Dwight Cass.