Breakingviews

Wall Street puts old Washington ways on ice

May 18, 2016

Big banks are infamous for lobbying against swathes of financial reform. Of late, though, they’ve cut back. Now they’re actively pushing congressional GOP bigwig Jeb Hensarling to ditch a bill to repeal Dodd-Frank. Fears of a public backlash are staying their hand – for now.

China’s planners won’t let go of the stock market

May 12, 2016

Regulators are reportedly clamping down on fundraising in hot sectors, and may restrict overseas companies relisting at home. The desire to avoid a repeat of last year’s bubble is understandable. But China’s equity market won’t evolve as long as bureaucrats try to manage prices.

Uber’s deal with U.S. drivers looks cheap

May 10, 2016

Treated as employees rather than contractors, the ride-hailing service might have had to pay them as much as $730 mln more, according to court papers. That makes a $100 mln two-state settlement look like peanuts – another reason why the judge on the case might reject it.

Mitsubishi Motors fiasco shows reforms lack oomph

May 5, 2016

The carmaker’s legacy of dodgy testing is astonishing. At best, management and directors were in the dark for 25 years. The firm badly needs a stronger board and better internal controls. For all the talk of improved corporate governance, much of Japan Inc is similarly lacking.

Mitsubishi Motors’ VW-style crash is justified

April 26, 2016

The Japanese carmaker’s value has dropped by $3.4 bln since it admitted fiddling test data. Though uncertainties abound, that reaction doesn’t look excessive. If its cash pile halves, EBITDA drops by a quarter and already-low valuation multiples shrink, the decline is deserved.

Uber driver deal just a detour from legal showdown

April 22, 2016

A $100 mln settlement resolves claims in two U.S. states that the $60 bln ride-hailing service should treat workers as employees, not cheaper contractors. Like paying driver fines for illegal pickups, though, the pact only buys time for Uber. Eventually, there’ll be a collision.

Jamie Dimon stands up to bank breakup bullies

April 7, 2016

The JPMorgan CEO’s latest annual missive tackles everything from Brazil to Brexit. An overriding message that bigger is better in finance mostly resonates, however. A reasoned case like Dimon’s is key as the likes of Bernie Sanders and Neel Kashkari advance the carve-up cause.

Abandoned Pfizer deal leaves all sides tainted

April 6, 2016

The U.S. Treasury looks bad for changing the rules to kill the $160 bln merger with Allergan. Lawmakers’ inaction encouraged such tax-driven transactions. But Pfizer and CEO Ian Read bear the most responsibility for wasting time and resources pushing an overpriced, risky deal.

Valeant’s multiple organ failure puts it in ICU

March 21, 2016

The beleaguered drugmaker has found accounting improprieties. It is booting CEO Mike Pearson but ex-CFO Howard Schiller has refused to quit as a director. The board, the numbers and the strategy are fractured. Some $30 bln of debt means Valeant risks an Enron or WorldCom endgame.

Bank CoCos deserve all the brickbats

March 18, 2016

Deutsche Bank’s John Cryan thinks new hybrid bank bonds are flawed. Market turmoil is forcing regulators to clarify when baffled investors get coupons. Yet unless there is also standardisation of when they convert from debt to equity, CoCos will always be prone to death spirals.