Financial Regulatory Forum

“Super managers,” governance spotlighted in economist Piketty’s blockbuster capitalism critique

By Henry Engler, Compliance Complete

NEW YORK – May 8, 2014 (Thomson Reuters Accelus) - How much of a role have corporate boards played in rising income inequality in the United States, the UK and elsewhere?

If one reads between the lines of French economist Thomas Piketty’s best-selling blockbuster book on capitalism and inequality – “Capital in the Twenty-First Century” – the answer might be: quite a bit.

The core of Piketty’s thesis and empirical evidence focuses on the long-term relationship between returns on capital and economic growth. Specifically, over long periods of time, when the return on capital exceeds the rate of economic growth, inequality tends to ensue. On the other hand, when growth exceeds capital’s return, income equality tends to improve as wealth is driven more by wage growth. Since 1970, according to Piketty, we have been living in world dominated by the former, with rising returns to holders of capital the primary force behind widening income gaps in the United States and certain European economies. In economic terms “r” – the return on capital – has been greater than “g” – the rate of growth – for some time. (more…)

BREAKINGVIEWS – Repo 105 rams home need for global accounting standards

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Hugo Dixon

LONDON, March 16 (Reuters Breakingviews) – Lehman Brothers’ now notorious “Repo 105″ scam depended on forum shopping. The investment bank was not able to persuade U.S. lawyers that the relevant repurchase agreements constituted real sales.

So it routed them through its UK subsidiary. That meant they came under the English legal system, and law firm Linklaters was able to opine that the transactions counted as sales.

ANALYSIS – Asia may have edge in top IASB accounting job

By Huw Jones

LONDON, Feb 15 (Reuters) – The hunt for a new chairman of the world’s top accounting standard setter is sparking discrete jostling for a job Asian candidates are seen having the edge as economic influence shifts east.

International Accounting Standards Board Chairman David Tweedie stands down in June 2011 after a decade spent transforming an obscure committee into a board whose rules are effectively law in over 120 countries, including the European Union.

Japan, Canada, India, Korea and Brazil are also adopting IASB rules, with China bringing its domestic standards in line too. The United States is left increasingly isolated as it decides how to join the club and when.

Global accounting body IASB shores up defences, investor focus

By Huw Jones

LONDON, Feb 15 (Reuters) – The world’s leading accounting standards setter bolstered its defences from political pressure on Monday and reinforced its role as an independent guide to investors rather than a tool for policymakers.

The International Accounting Standards Board (IASB) sets accounting principles that are effectively law in over 100 countries but has been criticised for being aloof and slow to respond to policymaker concerns during the financial crisis.

Its rules will form the bedrock for one set of global standards by mid-2011 as called for by the G20 group of leading nations to improve transparency for investors and cut red tape for companies.

ANALYSIS-China auditors set to take on Hong Kong stock market

By Alison Leung

HONG KONG, Dec 30 (Reuters) – Hong Kong’s pending acceptance of Chinese accounting standards will mark an important advance in Beijing’s drive to globalise its financial sector, but could also challenge international investors with reports prepared by an industry prone to scandal.

A proposed rule change likely to take effect next year would see Hong Kong’s stock exchange let locally-listed Chinese firms report using their home accounting standards, a move designed to lower costs and keep Hong Kong competitive with Shanghai.

But concerns about supervision of Chinese auditors have led to delays, making it unlikely the exchange will meet its Jan 1 target date to implement the change.

Bank assets book-keeping valuation rule simplified

    LONDON, Nov 11 (Reuters) – Pricing bank assets may prove less of a rollercoaster ride in future crises after a global standard setter revised a key accounting rule on Thursday after calls from world leaders to curb credit crunch fallout. (more…)

Global accounting rule-setter proposes quicker booking of bad loans

By Huw Jones
LONDON, Nov 5 (Reuters) – A global accounting standard setter published on Thursday a second leg of proposals to replace its fair value rule that was criticised by policymakers for amplifying the credit crunch.


U.S. SEC to review accounting rules roadmap

By Huw Jones
BASEL, Switzerland, Oct 8 (Reuters) – The U.S. Securities and Exchange Commission will review by the end of the autumn its milestones for possible adoption of a global set of accounting rules, its chairman Mary Schapiro said on Thursday.

Reuters Summit-Private bankers fret over cost of new rules

REYL & Cie SA Chief Executive Officer Franois Reyl gestures during the Reuters Global Wealth Management Summit in Geneva October 7, 2009.  REUTERS/Denis Balibouse (SWITZERLAND BUSINESS HEADSHOT) By Ian Simpson
GENEVA, Oct 7 (Reuters) – Private bankers face higher costs as a wave of regulation forces them to spend on infrastructure and more staff, executives told the Reuters Wealth Management Summit.


International accounting board rejects U.S. “fair value” rule plans

By Huw Jones
LONDON, Sept 30 (Reuters) – The top accounting rule setter said on Wednesday that U.S. plans to widen the scope of a rule blamed for amplifying the credit crunch was unacceptable, raising doubts over a 2011 deadline for a global set of accounting rules.