Reuters blog archive
from Financial Regulatory Forum:
By Stuart Gittleman, Compliance Complete
NEW YORK, Aug. 26, 2014 (Thomson Reuters Accelus) - It took just one day for U.S. Attorney General Eric Holder's announcement Thursday that Bank of America would pay $16.65 billion over charges of fraudulent mortgage origination, securitization and servicing to have an impact.
But the impact was probably one of the last things Holder wanted to see as a result of the deal.
On Friday, a Sacramento federal jury acquitted four defendants on charges of mortgage fraud, after hearing legal expert William K. Black testify that the defendants could not have defrauded their lenders because lenders during the buildup of the credit bubble did not rely on the veracity of loan applications. An attorney for the defendants said their position is supported by statements in the Bank of America settlement.
Sacramento is in the federal court system's Eastern District of California. The district includes the state's Central Valley, which has been called "Ground Zero" for fraud during the credit and housing bubble.
from Global Investing:
Emerging markets have been attracting healthy investment flows into their stock and bond markets for much of this year and now data compiled by consultancy CrossBorder Capital shows the sector may be on the cusp of decisively turning the corner.
CrossBorder and its managing director Michael Howell say their Global Liquidity Index (GLI) -- a measure of money flows through world markets -- showed the sharpest improvement in almost three years in June across emerging markets. That was down to substantially looser policy by central banks in India, China and others that Howell says has moved these economies "into a rebound phase".
By Robert Cole
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Seismic shifts in the organisation of human civilisation have occurred only twice in the last 10,000 years. Or so says Jeremy Rifkin in his new book, “The Zero Marginal Cost Society.” We are, he writes, in the throes of a third transition. It is one that will bring the death of capitalism and the onset of the “Collaborative Commons.”
from Financial Regulatory Forum:
By Henry Engler, Compliance Complete
NEW YORK, Mar. 12 (Thomson Reuters Accelus) - The term “unintended consequences” has often been used by critics of U.S. regulatory reform when characterizing its complexities. While well-intentioned individually, when unleashed in unison the multiple requirements banks that face become highly unpredictable, including across national borders.
What critics emphasize is that it is impossible to know how bank behavior might change when confronted with layers of regulation. Specifically, for foreign banking organizations (FBOs) operating in the United States, three separate pieces of reform will raise the cost of doing business in American markets:
from India Insight:
Rana Dasgupta’s first non-fiction book is an investigation into what makes Delhi a city of unequal transformation, salted with ambition, aggression and misogyny. "Capital: A Portrait of Twenty-First Century Delhi" takes its shape from an "outsider’s" anxiety about not being able to understand a city that is primarily the by-product of refugees from India’s partition in 1947.
Dasgupta, 42, was born and raised in England, and belongs to a family of migrants whose roots are in the Lahore of British India, now Pakistan. In 2000, he flew to Delhi after quitting a marketing job in New York and fell "into one of the great churns of the age".
From Turkey, which hiked its overnight lending rate by an astonishing 425 basis points in an emergency meeting on Tuesday, to India which delivered a surprise repo rate hike a day earlier, central banks are increasingly looking to "shock and awe" markets into submission with their policy decisions.
By George Hay and Neil Unmack
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
The European Central Bank has struck a balance between pragmatism and pain. The euro zone’s central bank has lifted the veil on its balance sheet review of 124 banks it will supervise from the end of next year. It has slightly pulled its punches, but in ways that might be justified.
from Bethany McLean:
In capital we trust. Capital is our savior, our holy grail, our fountain of youth, or at least health, for banks. Seriously, how many times have you read that more capital will save the banks from another Armageddon? Even the banks point to capital as a reason to have faith. "Financial institutions have also been working alongside regulators to make themselves and the financial system stronger, more transparent, more resilient and more accountable,” wrote Rob Nichols of the Financial Services Forum, which is made up of the chief executive officers of 19 big U.S. financial institutions. “Specifically, capital, which protects banks from unexpected losses, has doubled since 2009.” If you were a cynic -- who, me? -- you might say that the mere fact that the banks are pointing to capital is proof that capital is not all that.
Everyone seems to be ignoring the basic fact that capital isn’t a pile of cash. It’s an accounting construct. On his Interfluidity blog (which I found courtesy of Naked Capitalism), Steve Waldman writes, “Capital does not exist in the world. It is not accessible to the senses. When we claim a bank or any other firm has so much ‘capital,’ we are modeling its assets and liabilities and contingent positions and coming up with a number. Unfortunately, there is not one uniquely ‘true’ model of bank capital. Even hewing to GAAP and all regulatory requirements, thousands of estimates and arbitrary choices must be made to compute the capital position of a modern bank.” In other words, even if you give bankers credit for good intentions, the accounting that would truly capture “capital” may not exist. Or as Waldman writes, “Bank capital cannot be measured.” Layer in some real world realities. The next time things get tough, will regulators once again practice forbearance and allow firms to overstate their capital, which has the perverse effect of making no one trust reported capital? Let’s not forget Lehman, which according to Lehman had a very healthy Tier 1 ratio of 10.7 percent on May 31, 2008 and a total capital ratio of 16.1 percent. This didn’t matter, because no one believed Lehman’s capital was real.
from Global Investing:
It's difficult to find many investors who are enthusiastic about Russia these days. Yet it may be one of the few emerging markets that is relatively safe from the effects of "sudden stops" in foreign investment flows.
Russia's few fans always point to its cheap valuations --and these days Russian shares, on a price-book basis, are trading an astonishing 52 percent below their own 10-year history, Deutsche Bank data shows. Deutsche is sticking to its underweight recommendation on Russia but notes that Russia has:
By George Hay
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
Barclays is under the spotlight after Deutsche Bank's capital U-turn. Having trumpeted an organic capital strategy since being appointed co-chief executives of the German bank last year, Juergen Fitschen and Anshu Jain finally opted for a 3 billion pound equity placing to bolster capital. Barclays new boss Antony Jenkins doesn't look immune to a similar volte face.