Financial Regulatory Forum

July 26 (Reuters) – Britain detailed on Monday how its new financial supervisory regime will work from 2012 in a move that scraps the Financial Services Authority and turns the Bank of England into one of the most powerful central banks in the world.

Supervisors will be required to intervene more in day-to-day operations of banks, insurers and markets to nip risks in the bud before they destabilise the broader financial system.

The reform abolishes the discredited “tripartite” system of the FSA, the government and the Bank of England working together to supervise Europe’s biggest money centre.

(more…)

July 26 (Reuters) – Investors took some reassurance on Monday that most European banks had passed “stress tests” on their ability to deal with a debt crisis, driving up European bank stocks.

Seven out of 91 European banks failed the test, whose results were announced by the Committee of European Banking Supervisors (CEBS) late on Friday.

The following list shows which banks passed and which failed the tests requiring them to have a 6 percent tier one capital ratio under scenarios of worsened economic conditions. It shows their tier one ratio under the harshest scenario, which included a fall in the value of their sovereign bond holdings

LONDON, July 26 (Reuters) – Seven European banks failed a health check and need to raise their capital by 3.5 billion euros ($4.5 billion), much less than expected, as part of a long awaited industry “stress test”.

The tests, the results of which were released late on Friday, were criticised as too soft, but were applauded for providing greater transparency.

Here’s what top analysts said on the stress tests on Monday:

(more…)

Can the financial regulation law signed today prevent another crisis? Garett Jones, an assistant professor of economics at George Mason University, led a debate today at the Mercatus Center in Washington D.C. on the path financial reform will take now that it’s the law of the land. Watch the debate below.

The following is by John Wasik, a columnist for Reuters.com and author of “The Audacity of Help: Obama’s Economic Plan and the Remaking of America.” The opinions expressed are his own.

On its surface, the financial reform package looks tough on banks and Wall Street. Yet for individuals, the protections are much less pronounced and highly diluted.

Granted, the massive, 2,300-page-plus Dodd-Frank bill may slow down some bank failures. It may even impede avaricious trading desks from tanking the global financial system. For average investors, though, it’s a pyrrhic victory at best. Here are four major problems:

By Mike Dolan

LONDON, July 14 (Reuters) – Whether the euro zone is at the middle or end of its existential sovereign debt crisis, investors are starting to take a fresh look at the region’s assets and wondering if this year’s market panic was overdone.

Few analysts would be brave, or rash, enough to sound an “all-clear” on the regional financing storm — one seeded by Greek government profligacy and dodgy statistics but which also exposed flaws in the single currency’s framework and spread rapidly to other highly-indebted euro governments.

(more…)

July 12 (Reuters) – The European Union’s executive put forward proposals on Monday to bolster consumer confidence through better and faster protection of investors who face a run on their bank or have been the victim of fraud.

The European Commission’s plans are part of wider efforts to learn from the financial crisis, in which the savings of millions of people were hit by extreme market volatility and some banks had to be rescued by taxpayers.

The Commission has proposed toughening EU rules that protect bank account holders and retail investors. It has opened a public consultation on improving how insurance policy holders are safeguarded.

By Huw Jones

LONDON, July 9 (Reuters) – Global regulators gathering next week to finalise tough new bank capital rules face increased pressure to be more open after the market’s positive response to greater transparency over European bank stress tests.

The Basel Committee of central bankers and supervisors meets on July 14-15 to finesse its Basel III reform.

(more…)

(James Saft is a Reuters columnist. The opinions expressed are his own)

By Jim Saft

HUNTSVILLE, Ala., July 8 (Reuters) – How are European officials orchestrating the bank stress tests like Pacific islanders speaking into coconuts and waiting for cargo to drop from the skies?

They both make the elemental error at the heart of all cargo cults; they mistake necessity for sufficiency and hope that imitation and affect will make up for a lack of substance.

(more…)

By Timothy Heritage

BRUSSELS, July 9 (Reuters) – Gloom over the future of the euro zone is starting to lift after months of crisis, with policy makers sounding increasingly confident that the worst is over.

There are still plenty of risks. Economic growth is fragile, governments must keep the political will to impose austerity steps for years to come, and small banks in the hardest-hit countries remain unable to borrow in the markets, making them dependent on the European Central Bank for funds.

(more…)