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from Global Investing:
China data: Lessons from Yongzheng
This is a reference when the People's Bank of China makes big decisions.Difficulty in collating accurate data is perhaps not so surprising, given the rapid urbanisation of the world's second largest economy. Off-beat labour statistics (employing dissimilar methodology to the ILO) are partly skewed due to a large number of temporary registrants that slip the official statistics net. The solution? Jinny Lin at Standard Chartered, who thinks China's real GDP level is more likely around 5.5 percent, suggested this could be taken from the history books. Emperor Yongzheng, China's ruler in the late Qing dynasty, set up an independent body to look at data at the local level, and successfully stemmed tax evasion.
If local data is reliable enough, we should use local data.
Source: Flikr creative commons
Problems are found at a local level too, however. While the current system sets local government officials' bonuses for better GDP growth, there is no penalty for supplying incorrect data, neither are local government officials assessed on the jobs they create but via a points system. Instead local governments have 'soft' and 'hard' targets to attain, according to the panellists, some of which include environmental targets.
Then there is the issue of language. Some say data is more detailed in the Chinese language than in English, though official translations help bridge this gap. Quandaries remain, the resolution is still far from clear.
from Global Investing:
Indian markets and the promise of reform
What a difference a few months have made for Indian markets.
The rupee is 8 percent up from last summer's record lows. Foreigners have ploughed $17 billion into Indian stocks and bonds since Sept 2012 and foreign ownership of Indian shares is at a record high 22.7 percent, Morgan Stanley reckons. And all it has taken to change the mood has been the announcement of a few reforms (allowing foreign direct investment into retail, some fuel and rail price hikes and raising FDI limits in some sectors). A controversial double taxation law has been pushed back. The government has sold some stakes in state-run companies (it offloaded 10 percent of Oil India last week, netting $585 million). If the measures continue, the central bank may cut interest rates further.
Above all, there have been promises-a-plenty on fiscal consolidation.
The promises are not new. Only this time, investors appear to believe Finance Minister P. Chidambaram.
from Financial Regulatory Forum:
Standard Chartered case may not set model for targeting other banks
By Aruna Viswanatha and Brett Wolf
WASHINGTON/ST. LOUIS, Sept. 5 (Thomson Reuters Accelus) - Benjamin Lawsky's surprise move against Standard Chartered in an Iran sanctions case may have stunned the banking world, but it is unlikely to expand the scope of a series of similar U.S. cases against European banks that are still in the pipeline.
Lawsky, the New York state bank regulator, stunned the British bank, its shareholders and other U.S. authorities when he moved ahead last month with his own case against Standard Chartered, accused of hiding transactions involving Iran, which is under U.S. trade and economic sanctions.
By threatening to yank the bank's New York license and basing the core of his allegations on a much broader universe of transactions than usually covered in such cases, Lawsky initially signaled there was a new playbook on how to bring actions against banks for violating laws against doing business with certain sanctioned countries.
from Financial Regulatory Forum:
Standard Chartered’s big shareholders stay quiet on compliance, say focus is on governance
By Martin Coyle
LONDON/HONG KONG, Aug. 31 (Thomson Reuters Accelus) - Standard Chartered Bank's major shareholders are declining to openly criticise the firm's compliance practices but some cited overall governance issues as their primary interest following its settlement over allegations it breached Iran-sanctions laws. One institutional investor said that it had discussed compliance issues with the bank before this month's $340 million settlement was reached with New York's Department of Financial Services (DFS) for breaches of sanctions with Iran. The UK fund manager, which declined to be named, said that it discussed the allegations in general as well as compliance issues. "Compliance was discussed," the fund manager said without elaboration.
The enforcement action had happened so quickly that the bank had not discussed the issue with Standard Chartered before the matter became public, the source said. Afterwards, he said, several issues connected with the enforcement were raised. Speaking generally, the source said that compliance issues tended to test financial institutions but the investor was more concerned with governance issues "as a whole" rather than individual transactions.
from Financial Regulatory Forum:
Staging “Macbeth” in Manhattan: enforcement in the aftermath of Libor and Standard Chartered
By Justin O'Brien, Thomson Reuters Accelus contributing author
LONDON/NEW YORK, Aug. 31 (Thomson Reuters Accelus) - Despite the lack of commentary from either the White House or federal executive agencies, the Standard Chartered investigation — and the manner in which it was handled — is certain to reignite the festering feud over how to regulate finance. Absent the physical bloodshed, the power struggle for control of banking regulation and how to change its culture finds remarkable parallels in Macbeth, the classic Shakespearean tale of political infighting. As with Banquo's Ghost, the spectre of Eliot Spitzer and his battles with federal counterparts over the purpose of regulation looms large.
The conflict between state and federal authority has deep and complex roots. They trace back to the tenure of Spitzer as State Attorney General (SAG). How to resolve the conflicts were last, partially, adjudicated by the Supreme Court in 2009 in a case that owes its origins to Spitzer's questionable use of executive authority (Cuomo v Clearing House Association L.L.C.). The Supreme Court then struck down attempts by the Office of the Comptroller of the Currency to preclude any state enforcement action against national banks. Simultaneously it upheld the federal agency's sole "visitorial" or supervisory rights.
from Breakingviews:
Besieged StanChart needs governance booster
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Standard Chartered needs a governance booster. The UK-based bank is under attack from a New York financial regulator over trades for Iranian clients that could see the bank landed with a huge fine, or worse. A stronger board wouldn’t have prevented the assault, but it might help the bank recover more quickly.
from Breakingviews:
Exclusive: StanChart threat rings Fed alarm bells
By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
New York state financial watchdog Benjamin Lawsky has put the Federal Reserve in an uncomfortable twist. His threat on Monday to revoke Standard Chartered’s Wall Street license over allegedly illegal Iranian money transfers clanged some alarm bells inside the central bank. The worry is that his surprise risks unsettling customers and depositors.
from Breakingviews:
Standard Chartered selloff has gone far enough
By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Standard Chartered’s share price plunge has gone far enough. A New York regulator’s allegations of sanctions busting and threats to remove its Wall Street licence wiped almost a quarter off the bank’s market value. StanChart’s reputation as a haven from economic and regulatory storms will be hard to rebuild. But its position in emerging markets - and persistent takeover speculation - should support the shares.
from The Great Debate UK:
Is the U.S. picking on our banks?
By Kathleen Brooks. The opinions expressed are her own.
Standard Chartered is the latest UK-based bank that seems to be getting it in the neck from our friends across the water. Firstly, there was Barclays and the Libor scandal, then there was HSBC which was fined for allowing drug-trafficked money from Mexico to go through its system and now there is Standard Chartered which is charged with “wilfully misleading” the New York Department of Financial Services and clearing $250 billion of Iranian transactions through its U.S. operation.
Two can be a coincidence, but three in as many months? Since the news on Standard Chartered broke there has been a torrent of investors, politicians and even some in the media who have queried whether this is just an attempt by Washington to discredit London and re-establish New York as the world’s financial centre.
from Breakingviews:
StanChart anti-U.S. rant will resonate
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The stand-out quote in the New York financial regulator’s attack on Standard Chartered is the description of an unnamed banker allegedly railing at “f—ing Americans” who “tell us, the rest of the world, that we’re not going to deal with Iranians”. This charmless F-bomb will rankle domestically, but may resonate further afield.
