Investors have more than one reason to celebrate two new accounting rules. Besides forcing banks to fess up to the risks they are carrying on their books, new standards for off-balance sheet assets will make it harder for companies to inflate earnings artificially.
Paul Volcker, the former Fed chairman whose nerves of steel broke the back of double-digit inflation 30 years ago, shows that he’s still one of the few in government that wants to call the tough shots. Too bad he isn’t more influential. If he were, I doubt Wall Street would be talking about getting back to business as usual.
Barclays has come up with an interesting way to solve an optical problem. Concerned that the bank’s shareholders are nervous about possible future writedowns of wobbly assets with a value of $12.3 billion, it has sold them to its own employees.
from Rolfe Winkler:
President Barack Obama pledged on Monday "to put an end to the idea that some firms are 'too big to fail.'" Though he outlined some worthy prescriptions, he failed to face up to the very size and power of the financial institutions that makes "too big to fail" possible.
from Rolfe Winkler:
Paul Miller, the analyst that covers banks and thrifts for FBR Capital Markets, put out a report today breaking down Tim Geithner's Framework for Reforming Banking Firms. Geithner's plan is a good document, showing that Treasury takes very seriously the need to establish tougher, more robust capital requirements for banks. Miller broke down the recommendations in the handy chart below.
In his speech, Obama emphasizes that big banks should take it upon themselves to give back to the community after the tax payer has done so much to put them on them on the road to recovery. While I agree with the point in theory, I’m not sure Wall Street is built to think about the moral imperative of creating a better society when it’s primary goal is to make money.
Ho hum! Another G20 summit, another Sarkozy walkout threat.
The French president’s menaces to throw his toys out of his pram have become a regular feature of the run-up to each meeting of the world’s leading economic powers, making them a much debased coinage. Sarko’s strops are now as routine a precursor to G20 gatherings as the vacuuming of red carpet or the deployment of flower arrangements.