from Financial Regulatory Forum:

US regulators propose ban on ‘flash’ trading

September 18, 2009

BRITAIN/   By Karey Wutkowski
   WASHINGTON, Sept 17 (Reuters) - U.S. securities regulators proposed on Thursday a ban on flash orders that stock exchanges send to a select group of traders, fractions of a second before revealing them publicly.
   The Securities and Exchange Commission is seeking to end the practice criticized for giving an unfair advantage to some market participants who have lightning-fast computer trading software.
   Nasdaq OMX's <NDAQ.O> Nasdaq Stock Market and privately-held BATS Exchange recently canceled their flash services that disclosed buy and sell orders to specific trading firms before sending them to the wider market.
   NYSE Euronext's <NYX.N> New York Stock Exchange did not adopt the flashes under scrutiny but major alternative venue Direct Edge still offers flashes.
   The SEC will put its proposal out for public comment for 60 days, and will later schedule a meeting to decide whether to adopt the proposal.
   The agency said it will seek feedback on on the cost and benefits of the proposed ban, and whether the use of flash orders in options markets should be evaluated differently from those in equity markets.
   The agency also tightened rules on credit rating agencies by imposing more disclosure requirements and encouraging unsolicited ratings. Those moves, and others proposed by the SEC, took aim at an industry widely criticized as having fueled the financial crisis through over-generous ratings assigned to toxic mortgage-backed securities. [ID:nN17202110]
  
   BROADER REVIEW
   The proposed ban on flash orders is part of a broader effort by the SEC to crack down on obscure corners of the U.S. stock market.
   SEC Chairman Mary Schapiro said the agency will keep  reviewing trading practices that may give an unfair advantage to some market players. "Other market practices may have similar opaque features," she said.
   Supporters of high-frequency trading practices such as flash trading say they add needed liquidity to the markets, and allowed the markets to function smoothly during the financial crisis.
   But critics, including some lawmakers, say the markets need to be better policed so all investors are operating on an even playing field.
   In July, Senator Charles Schumer, a New York Democrat, told the SEC to curb flash trading and threatened the agency with legislation if it failed to do so.
   Schumer said in a statement on Thursday that flash trading could seriously undermine fairness and transparency in markets.
   "This ban, as proposed, is pretty much water-tight and should not be weakened by the commission as the rule-making process goes forward," he said.
   Joe Mecane, NYSE Euronext's executive vice president of U.S. markets, has said flashes were "a relatively small debate that evolved into a very large debate."
   At most, flashes represented less than 3 percent of U.S. equity trading volume.
   All five SEC commissioners voted to propose the flash trading ban, but some were cautious about overreaching in  reviewing other market practices.
   Troy Paredes, a Republican commissioner, said investors ultimately benefit from regulatory restraint. "Exchanges and other trading venues need flexibility to innovate new products, services and trading opportunities," he said.
   Democratic commissioner Elisse Walter also cautioned against too broad a crackdown and said each trading practice should be examined separately and carefully.
   "They have different potential benefits and different concerns," Walter said. (Reporting by Karey Wutkowski; Editing by Tim Dobbyn) ((Email:karey.wutkowski@thomsonreuters.com +1 202 898 8374)) Keywords: SEC/FLASHTRADING 
  
Friday, 18 September 2009 00:10:07RTRS [nN1778693 ] {C}ENDS

from Financial Regulatory Forum:

Lehman: Barclays got $8.2 bln “windfall” from sale

September 16, 2009

Signs are displayed on the former Lehman Brothers, now Barclays Capital building in Times Square in New York September 23, 2008. REUTERS/Eric Thayer (UNITED STATES)   By Phil Wahba and Emily Chasan
   NEW YORK, Sept 15 (Reuters) - Lehman Brothers Holdings Inc <LEHMQ.PK> said on Tuesday that Barclays Capital Inc <BARC.L> got a $8.2 billion "windfall profit" from excess assets it took control of in the fire sale of Lehman's U.S. brokerage business a year ago.
   In court papers filed in federal bankruptcy court in Manhattan on Tuesday, Lehman claimed that "critical changes" were made to the sale in between the time the sale order was signed and the deal was closed, resulting in Barclays gaining control of assets that Lehman contends were not supposed to be part of the sale.
   Lehman filed for bankruptcy on Sept. 15, 2008, in the largest U.S. bankruptcy in history. Its flagship U.S. brokerage business was sold to Barclays less than a week later in a hurriedly-assembled deal.
    "Certain Lehman executives agreed to give Barclays an undisclosed $5 billion discount off the book value of securities transferred to Barclays, and later agreed to give billions more in so-called "additional value" that Barclays demanded, but the court never approved," Lehman said in the court filing.
    The charges come after Lehman received approval in June to probe whether Barclays got "too good of a deal" when it bought Lehman's brokerage business, as the British bank was able to quickly book a $4.2 billion gain on its $1.75 billion purchase. Barclays said at the time that it did not expect the probe to result in any additional claims.
  Lehman was allowed to probe Barclays because of the speed with which the deal with Lehman's was reached. "It's conceivable that mistakes were made," said Judge James Peck of U.S. Bankruptcy Court for the Southern District of New York at a hearing in June.
   Lehman alleged in the filing that Barclays had committed to pay former Lehman employees $2 billion in bonuses but never did and "never intended to do so" despite factoring them in to the terms of the sale.
   The difficulties with the valuations of assets and liabilities were "exacerbated the fact that many of the Lehman decision makers who 'negotiated' the transaction with Barclays had at the same time been offered lucrative" jobs at Barclays on condition the sale be closed, Lehman said.
    "This is an opportunistic claim," Barclays said in a statement on Tuesday. "Now that the economy has begun to stabilize the Lehman Estate is trying to re-trade the deal on the basis of a meritless argument."
   Lehman is asking the court to amend the deal and a hearing is scheduled for Oct. 15.
   The Trustee overseeing the liquidation of Lehman's North American brokerage business and return of assets to customers also said in a statement on Tuesday that "billions of dollars in additional assets" that Barclays claims it owns are "customer property" and were not authorized by the sale.
   "The transfer of these assets to Barclays would create an unfair windfall for Barclays at the expense of public customers," James Giddens, the trustee for the Liquidation of Lehman Brothers Inc. under the Securities Investor Protection Act said in the statement.
   The case is In re: Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.
 (Reporting by Emily Chasan and Phil Wahba, additional reporting by Chelsea Emery; Editing Bernard Orr) ((emily.chasan@thomsonreuters.com; +1 646 223 6114; Reuters Messaging: emily.chasan.reuters.com@reuters.net)) Keywords: LEHMAN/BARCLAYS 
  
Tuesday, 15 September 2009 23:26:12RTRS [nN1576688 ] {C}ENDS

from Financial Regulatory Forum:

A year after Lehman, Bernanke says recession likely over

September 16, 2009

U.S. Chairman of the Federal Reserve Ben Bernanke speaks about a year of economic turmoil at the Brookings Institution in Washington September 15, 2009. REUTERS/Jim Young    (UNITED STATES POLITICS BUSINESS)   By Caroline Valetkevitch
   NEW YORK, Sept 15 (Reuters) - A year after the Lehman Brothers collapse, Federal Reserve chief Ben Bernanke said on Tuesday the recession was likely over, while data supported hopes that recovery from the worst downturn in decades was advancing.
   But Bernanke said the recovery would be slow and it would take time to create jobs. Similar warnings came from the Bank of Canada and Bank of England, whose governor also said the bank could cut the interest rate it pays on commercial banks' deposits. For more see [ID:nN1523355].
   The comments came exactly one year after the collapse of Lehman Brothers investment bank, an event that set off the U.S. economy's worst recession since the 1930s and helped spark a global financial crisis.
   "Even though from a technical perspective the recession is very likely over at this point, it's still going to feel like a very weak economy for some time," Bernanke said after addressing a Brookings Institution conference. Fed officials meet next week to review their policy options.
   The U.S. Commerce Department said retail sales climbed 2.7 percent in August after declining 0.2 percent in July. It was the biggest monthly advance since January 2006 and well above expectations on Wall Street for a 2 percent increase.
   "Retail sales show the recovery is here. This wasn't just autos, it wasn't just gasoline. This was the U.S. consumer getting out of their foxhole," said T.J. Marta, market strategist at Marta on the Markets in Scotch Plains, New Jersey. "This is indisputably a good number."
   Readings on manufacturing in the New York region and on national producer prices also came in stronger than expected.
   Stocks in Europe and the United States rose after the retail data, with the benchmark Standard & Poor's 500 index <.SPX> gaining 0.3 percent to end at 1,052.63, while U.S. Treasuries prices <US10YT=RR> fell, pulling benchmark yields back from two-month lows.
   The S&P is up about 55 percent since hitting 12-year lows in early March, but investors have been eager to see more definitive signs that the economy is getting better.
   In its monthly report, the Organization of Petroleum Exporting Countries, which left its world oil demand forecast for 2010 unchanged, also said a recovery will be slow and gradual, even though evidence shows the world economy should be improving.
   Crude oil prices in New York <CLV9> rose $2.07 to $70.93 a barrel.
   In Germany, the ZEW survey showed a smaller-than-expected improvement in the country's investor morale.
   The ZEW's expectations index for Germany rose to 57.7 from 56.1 in August, reaching its highest since April 2006, although economists had expected a bigger rise.
    Adding to the mostly upbeat comments on the economy in the United States, President Barack Obama told autoworkers the U.S. economy was on the mend. [ID:nN1549500]
   Even with signs of economic improvement, the rising U.S. unemployment rate has remained a top worry and autoworkers have been among the hardest hit by layoffs.
   The Bank of Canada's deputy governor, meanwhile, said a smooth economic recovery in Canada is not yet assured and that the strength of the Canadian dollar is one factor that could derail a comeback. (Reporting by Reuters reporters worldwide; Editing by Dan Grebler) ((caroline.valetkevitch@thomsonreuters.com; Tel: +1 646 223 6393; Reuters Messaging: caroline.valetkevitch.reuters.com@reuters.net)) Keywords: FINANCIAL/ 
  
Tuesday, 15 September 2009 22:46:09RTRS [nN1576055 ] {C}ENDS

from Financial Regulatory Forum:

U.S. says banks getting help cut lending in July

September 16, 2009

REUTERS/Cheryl Ravelo WASHINGTON, Sept 15 (Reuters) - The U.S. Treasury Department said on Tuesday that banks receiving government bailout funds cut their new lending by 10 percent in July.
A monthly survey of lending activities at the top 22 banks that have received capital injections showed their overall outstanding loan balance was down 1 percent from June to July because of less demand from borrowers and charge-offs by banks, the Treasury said.
"Total origination of new loans at the 22 surveyed institutions decreased 10 percent from June to July," the Treasury report said, adding that the value of new loans by all the banks was about $282 billion in July.
The decision to pump taxpayers' money into banks was motivated largely by lawmakers' wish for banks to keep lending, but a sluggish economy and more cautious consumers appear to be leading to more cautious use of credit.
Treasury said banks again reported that demand in the commercial real estate and the commercial and industrial loans markets "is well below normal levels," adding that "none of the respondents predicted change in demand in the near term."
Banks said real estate developers were reluctant to begin new projects "under current poor economic conditions, which include a rising supply of office space as firms downsize and vacancies rise."
In addition, total credit card outstanding balances fell by 1 percent from June to July, indicating that consumers were spending conservatively and paying down balances.
"Job losses, generally low levels of consumer spending and higher savings rates contributed to the decline in credit card balances," Treasury said. (Reporting by Glenn Somerville; Editing by Leslie Adler)
((glenn.somerville@thomsonreuters.com; +1-202-898-8377; Reuters Messaging: glenn.somerville.reuters.com@reuters.net)) Keywords: USA TREASURY/LENDING

from Financial Regulatory Forum:

U.S. Treasury to wind down financing program -WSJ

September 16, 2009

FINANCIAL/BAILOUT-GEITHNER    Sept 16 (Reuters) - The U.S. Treasury Department is expected to begin winding down the Supplementary Financing Program, which provides cash for Federal Reserve initiatives, to avoid hitting the $12.1 trillion debt ceiling, the Wall Street Journal reported, citing people familiar with the matter.
   The Treasury is expected to wind down the program to as little as $15 billion but government officials want to keep it in place in case it is needed in the future, the paper said.
   The Treasury Department could not be reached for comment.
   The Supplementary Financing Program was announced in September last year in which the Treasury issued bills apart from its regular borrowing program. Last fall, the Treasury had raised almost $560 billion by issuing bills under the program. (Reporting by Santosh Nadgir in Bangalore; Editing by Dan Lalor) ((santosh.nadgir@thomsonreuters.com; within U.S +1 646 223 8780; Outside U.S +91 080 4135 5800; Reuters messaging: santosh.nadgir.reuters.com@reuters.net))
 Keywords: TREASURY/FEDERALRESERVE
  
Wednesday, 16 September 2009 06:40:26RTRS [nLG711102 ] {C}ENDS

from FaithWorld:

U.S. religious conservatives and progressives profiled

September 15, 2009

The first ever comparative surveys of U.S. conservative and progressive (or liberal) religious activists has just been published by the Bliss Institute of Applied Politics at the University of Akron and Public Religion ResearchClick here for a link to the survey.

from Financial Regulatory Forum:

US’ Geithner – less need for government in markets

September 11, 2009

FINANCIALS-GEITHNER/   By Glenn Somerville and David Lawder
   WASHINGTON, Sept 10 (Reuters) - U.S. Treasury Secretary Timothy Geithner said Thursday a strengthening economy means the government can end some of the extraordinary support it put in place for markets and prepare for a slow recovery.
   Appearing before the Congressional Oversight Panel for the $700 billion Troubled Asset Relief Program, Geithner said the economy was in far better shape now than a year ago when it was "on the verge of collapse," though it still had problems.
   "As we enter this new phase, we must begin winding down some of the extraordinary support we put in place for the financial system," he said. "We are now in a position to evolve our strategy as we move from crisis response to recovery."
   Geithner faced a grilling from the TARP panel members, who wanted to know why taxpayer-provided aid was so available for financial firms but not to other types of businesses. He suggested the decision to aid banks was paying off.
   At a later town hall meeting carried by CNBC television, Geithner told questioners that he was confident China will remain a big buyer of U.S. debt securities because it also wants to see the global economy regain its balance.
   But he said there must be tighter controls over risk-taking by banks, calling that "a critical part of creating a more effective financial system." He also said they will include tying executives' pay more tightly to performance in future.
   Geithner said banks that received capital injections have repaid more than $70 billion, reducing the government's total investment to $180 billion. and estimated another $50 billion will be repaid over the next 12 to 18 months.
   STILL A ROCKY ROAD
   "We still have a long way to go before true recovery takes hold," he told the panel, adding it will be necessary to keep applying stimulus measures as necessary to get growth firmly back on track.
   Another senior Treasury official told reporters earlier that Treasury will allow its money market mutual fund guarantee program to expire on Sept. 18.
   The backstop program was created a year ago to prevent panic withdrawals of $3.4 trillion in savings after a key fund "broke the buck" when its net asset value per share fell below $1. The program took in $1.2 billion in fees from funds, but has not had any payouts.
   Geithner boasted that the economy now was "back from the brink" of the free fall that it was in when the Obama administration took office in January even though recovery likely will be gradual at best.
   TOXIC ASSETS AN ISSUE
   Treasury intends to press ahead with so-called public-private investment funds to buy toxic assets. The senior Treasury official predicted that the first purchases should occur by early October.
   The official said there was a "great deal of interest" in purchasing toxic assets among investors and money managers running the funds, but the appetite among banks to sell their toxic assets has been less than anticipated.
   "We thought it would be necessary for banks to sell some of these assets in order to attract private capital. It turned out that they were able to raise the capital without selling the assets," the official said.
   Geithner said that by providing support for U.S. automakers, the government avoided substantial job losses and that a specially assembled Auto Task Force had avoided intervening in day-to-day decisions by management of General Motors Corp and Chrysler Corp.
   "Such intervention could seriously undermine the companies' long-term viability and, consequently, their ability to repay the taxpayer for its investment," Geithner said.
   He cited a litany of problems still facing the economy, including "unacceptably high" unemployment, a shaky mortgage market outside those covered by mortgage finance sources Fannie Mae <FNM.N> and Freddie Mac <FRE.N>, strained financing for commercial real estate enterprises and tight credit for small business.
   Given those conditions, "it is realistic to assume recovery will be gradual, with more than the usual ups and downs," Geithner warned.
 (Editing by Kenneth Barry) ((glenn.somerville@thomsonreuters.com; Tel: +1-202-898-8377; Reuters Messaging: glenn.somerville.reuters.com@reuters.net))
Keywords: FINANCIAL/BAILOUT GEITHNER 
  
Friday, 11 September 2009 01:03:18RTRS [nN10401052] {C}ENDS

from Financial Regulatory Forum:

US Treasury bans lobbying on pending TARP requests

September 11, 2009

no_talking    WASHINGTON, Sept 10 (Reuters) - The U.S. Treasury on Thursday posted new lobbying restrictions to curb political influence on investments from the government's $700 billion bailout program, prohibiting most communications once a funding application has been filed.
   The new rules, under development since January, allow Treasury officials to speak with registered lobbyists and other outside persons concerning general questions about the logistics and implementation of funding requests from the Troubled Asset Relief Program.
   But Treasury officials contacted about specific applications that are not logistical in nature must "immediately end the conversation," according to guidance published on the Treasury's website.
    The Treasury employees must report the incident immediately and the name of the lobbyist and other participants, along with a brief description of the conversation, will be posted on the Treasury website within three days, according to the guidance.
   In a set of frequently asked questions, the Treasury said once a company applies for funding, "its representatives cannot initiate communications with you (Treasury employees) orally about the merits of the application or proposal."
   Communications from an outside party at a "widely attended" industry gathering are exempted from the ban but not private conversations that may occur at such a gathering.
   The Treasury has similar rules in place to curb political influence on tax matters.
   Since the bailout program was launched in October 2008, the Treasury has invested over $200 billion into more than 600 banks in its Capital Purchase Program, of which more than $70 billion has been repaid.
   It has put up over $80 billion in support for the auto industry and invested another $115 billion to prop up American International Group <AIG.N>, Citigroup <C.N> and Bank of America <BAC.N>.
   The special inspector general for the TARP program, Neil Barofsky, recently conducted a study that found no evidence that the Treasury's TARP investments were unduly influenced by lobbyists or politicians, but he recommended that the controls over these decisions be improved. (Reporting by David Lawder; Editing by Kenneth Barry) ((rachelle.younglai@thomsonreuters.com; +1 202 898 8411)) Keywords: FINANCIAL/BAILOUT LOBBYING
  
Friday, 11 September 2009 01:11:53RTRS [nN10420373] {C}ENDS

from Financial Regulatory Forum:

U.S. lobbying rules for bailout firms seen soon

September 5, 2009

USA/   WASHINGTON, Sept 4 (Reuters) - The U.S. Treasury Department is expected to soon issue final lobbying restrictions for companies receiving taxpayer funds from the government's $700 billion bailout program, two sources familiar with Treasury's thinking told Reuters on Friday.
   The rules to curb outside influence in allocation of bailout funds are expected to severely restrict contacts with lobbyists in applications for investments in banks and other firms under the Troubled Asset Relief Program (TARP).
   The new rules have been under development since January and could be published as early as next week, one source said.
   The Treasury has indicated the rules will be modeled on the approach taken in the Obama administration's $787 billion economic stimulus program to shield disbursements from lobbyist influence.
   Under those rules, once government employees establish they are speaking to a federally registered lobbyist regarding stimulus expenditures, they must decline or immediately end the conversation and report the incident. Similar restrictions would apply to the Treasury and financial regulators that evaluate TARP investment requests.
   The Treasury has similar rules in place to curb political influence on tax matters.
   A Treasury spokeswoman declined to comment on the timing of the new lobbying restrictions for TARP bailouts.
   When the Treasury announced the rule-making effort in January, it said it would be required to certify to Congress that "each investment decision is based only on the investment criteria and the facts of the case."
   Since the bailout program was launched in October 2008, the Treasury has invested $204.5 billion into over 600 banks in its Capital Purchase Program, of which more than $70 billion has been repaid.
   It has put up over $80 billion in support to the the auto industry and invested another $115 billion to prop up American International Group, Citigroup <C.N> and Bank of America <BAC.N>.
   The special inspector general for the TARP program, Neil Barofsky, recently conducted a study that found no evidence that the Treasury's TARP investments were unduly influenced by lobbyists or politicians, but he recommended that the controls over these decisions be improved.
   (Reporting by David Lawder and Rachelle Younglai; Editing by Andrew Hay)
   ((rachelle.younglai@thomsonreuters.com; +1 202 898 8411))
Keywords: FINANCIAL/BAILOUT LOBBYING 
  
Friday, 04 September 2009 22:35:04RTRS [nN04189459] {C}ENDS