Commentaries

Team Obama punts again on derivatives

August 11, 2009

The Obama administration formally sent its plan for regulating derivatives to Capitol Hill today. And to no one’s surprise, the key proposal in the 115-bill is a plan to regulate “standard” derivatives on regulated exchanges of clearinghouses.

What derivatives, porn have in common

August 7, 2009

The key to the Obama administration’s plan to bring order to the murky world of derivatives ultimately rests on the definition of what is a standard run-of-the mill derivative.

Can good numbers be bad news?

July 31, 2009

Barring any unexpected stumbles, and revisions aside, today will be the last time this year that Americans are told their economy is shrinking.

The danger of a lost generation

July 24, 2009

– Christopher Swann is a Reuters columnist. The views expressed are his own —

Geithner comes up empty

July 10, 2009

Tim Geithner took center stage on Capitol Hill today and once again he disappointed.

GM drives route 363, bondholders beware

July 10, 2009

     The rough justice meted out to General Motors bondholders may have short-circuited the bankruptcy process, but it has damaged the confidence that holders of other debt can have in their right to fair treatment.
    There will be a long-term cost, both to borrowers and lenders as a result. Key to this has been the use — by both GM and Chrysler – of section 363 of Chapter 11 of the U.S. bankruptcy code. By invoking the “emergency” need to restructure the companies, this section has allowed the automakers to speed through the sale of the viable parts of the businesses to new companies and leave the debt behind.
    While route 363 by-passes lengthy court hearings, its use to sell prime assets drives straight through the spirit of the code, which was meant to allow companies going through a Chapter 11 to jettison non-core assets quickly as part of a longer and wider reorganisation. It was not designed to cream off the best ones.
    Lawyers are already invoking the Chrysler and GM examples to try and get round long-established rules for reorganisations.
    The result would be to deprive bond investors of their rights in a company restructuring.
    GM bondholders who would normally have enjoyed preferred credit status in a Chapter 11 were railroaded by the Obama administration into giving the quick-fire sale the go-ahead, on the grounds that this was a one-off.
    From GM’s point of view, the process has worked well, allowing the business to emerge only 40 days after filing for bankruptcy. The cost of the turnaround has been $50 billion in emergency government financing. The longer-term cost in the much bigger market for corporate debt may be far larger.

When derivatives go bad

July 2, 2009

THUD! That’s the sound a busted derivative trade makes when it lands at the courthouse steps.

Your new consumer watchdog

June 30, 2009

The Obama administration just released draft legislation for its newly proposed Consumer Financial Protection Agency. The 152-bill would create a five-member commission with the power to make rules and issue subpoenas. 

Who will be the global regulator?

June 26, 2009

BusinessWeek’s Chief Economist Michael Mandel argues here that it may require the creation of a global regulator to control global banks.

Cut out the carbon middleman

June 26, 2009

The opposition by the Republicans to the idea of carbon trading is a bit baffling, given that it is a classic Wall Street-driven solution for dealing with a serious problem.