UK banks need government to solve funding squeeze

December 6, 2011

The Bank of England’s new 30-day facility should help keep lenders afloat if the euro crisis causes short-term liquidity to dry up. But banks also need help refinancing 140 billion pounds of term debt in 2012. For that, the state may need to guarantee their debt once more.

Fed needs better PR on last-resort lending, too

December 7, 2011

The U.S. central bank is working on its monetary policy communications. But its key role as a crisis lender is also in the spotlight over a $7.8 trln number that has been mischaracterized by some news outlets. The Fed would get less flak if it managed this message better as well.

Investors may decide to let the euro live

December 8, 2011

George Soros showed that there’s money to be made breaking fixed exchange rates. Destroying the euro is different; that could wreck the global economy. This fear may explain the markets’ move from pessimistic to optimistic interpretations of fairly consistent euro zone news.

UK’s euro isolation may backfire on City of London

December 9, 2011

David Cameron says he was defending Britain’s financial industry when he opted out of the pan-European deal to save the euro zone. But the prime minister’s stand leaves the City exposed in Europe - and at home. And it further diminishes the UK influence over designing new rules.

Morgan Stanley housecleaning will please Basel

December 13, 2011

Chief Executive James Gorman’s settlement with bond insurer MBIA puts a big chunk of the financial crisis legacy behind the firm. At $1.8 bln it doesn’t come cheap. But it puts Morgan Stanley on the right track by boosting regulatory capital and tidies up a very messy year.

Sino-Forest’s debt games are bad for creditors

By Wei Gu
December 15, 2011

The decision not to pay $10 mln interest may push the scandal-hit Chinese timber firm towards default and a restructuring process. Bond holders are in a weak negotiating position. Most of the assets, if they really exist, are inside China, where it is hard to enforce claims.

Global bank capital rules add “G-Sifi envy” to mix

By Rob Cox
December 20, 2011

Labeling 29 lenders as globally systemic will introduce a new dynamic to finance in 2012. Banks on the list must hold more capital, yet gain a too-big-to-fail halo. Smaller competitors may try to join the club. It’s a race to the top, but not in the way regulators envisaged.

Bond market will grow at banks’ expense in 2012

December 22, 2011

Tougher capital rules and funding strains have pushed up the cost of bank credit. That's giving borrowers an extra push to find other sources of funds. Big companies will increasingly seek to tap the bond market. But small companies and consumers won't find it so easy to switch.

Ron Paul’s staying power threatens to alter debate

January 11, 2012

The New Hampshire primary results keep the outspoken libertarian in the hunt for the Republican nomination. Paul’s strong showing also could inspire him to make a third-party run. His continued presence will shift the discussion on sound money, spending and U.S. isolationism.

Double-dipping Twinkies tarnish bankruptcy process

January 11, 2012

Chapter 11 is supposed to give crippled companies a fresh start. Yet, Hostess, the maker of iconic American junk food, has gone bust just three years after emerging from bankruptcy court. Such recidivism should make investors more skeptical about the court’s cleansing power.