Financial Regulatory Forum

Reforming banking’s risk culture requires breaking “accountability firewall”

By Henry Engler, Compliance Complete

NEW YORK, Sept. 11 (Thomson Reuters Accelus) - If there is one part of the cultural makeup of Wall Street that remains firmly in place despite the financial crisis and subsequent avalanche of regulations, it is the reticence among those who lose money to come clean early.

Many of the most spectacular losses in recent years — whether the JPMorgan “London Whale” episode, the UBS “rogue trader” incident, or Jerome Kerviel’s manipulation of internal systems at Société Générale — have all had one thing in common: concealment of trades gone badly wrong, or at a minimum, a lack of transparency and early acknowledgement of losses. And if one can point to a single reason for such behavior, it is the well-known fact that raising the red flag would mean the individual responsible would be shown the door. (more…)

New U.S. capital framework may prove burdensome for small banks

By Bora Yagiz

NEW YORK, June 25 (Thomson Reuters Accelus) - As part of an effort to bring the United States in line with the international standards of Basel III, the Federal Reserve Board, the Office of the Comptroller of Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), on June 8, 2012, jointly proposed three rules dubbed together as the integrated regulatory capital framework.

Two of these rules, namely the proposal on Basel III, and the proposal on Standardized Approach (the approach used by small banks) would modify standards for risk-weighted assets calculation, set new minimum capital requirements and refine capital quality through various eligibility restrictions for all banks, savings associations, bank holding companies (BHC) with greater than $500 million of assets, and all savings and loan holding companies (SLHC). (more…)

Euro rescue could help banks in regulatory battle

By Lionel Laurent and Huw Jones

PARIS/LONDON, May 10 (Reuters) – A $1 trillion rescue package to stabilise the euro could bolster European banks’ negotiating power as they attempt to fight stricter regulatory capital requirements they expect will hurt economic growth.

Europe’s lenders are already significant holders of sovereign euro debt and will be relied upon to buy more state-guaranteed debt as part of the rescue package, which is likely to see them push for extra concessions, analysts said.

“What there needs to be is a realisation among politicians that you cannot legislate and regulate the banks’ profitability away and expect them to keep buying your debts,” MF Global bank sector analyst Simon Maughan said.

Is regulation too risky to leave to politicians? EU banks think so

By Huw Jones

Put regulation in the hands of politicians and, well, it becomes politicised.

That, anyway, is what Europe’s new kid on lobbying block, the Association for Financial Markets in Europe (AFME’s), told the Reuters Regulation Summit about EU plans to crack down on opaque derivatives markets by insisting on central clearing of standardised contracts, trade reporting and even exchange trading. (more…)

Bundesbank must remain independent, Zeitler says

    BERLIN, April 11 (Reuters) – The Bundesbank will not agree to any new national financial supervision structure that might impinge upon its independence, a board member of the German central bank said in a newspaper interview published on Sunday. (more…)

BREAKINGVIEWS-Far too little stress in U.S. bank reform

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

By Rob Cox

NEW YORK, April 6 (Reuters Breakingviews) – Improving U.S. bank regulation may call for a little more stress. The disclosure and discipline imposed by the Federal Reserve’s stress tests of big banks a year ago drew a line under the crisis. The tests separated sheep from goats and led to tens of billions of dollars of new capital being raised. It’s a shame that stress tests aren’t becoming an annual event.

The tests have been overshadowed by the Troubled Asset Relief Program. After all, that $700 billion plan to recapitalize the banking system kept institutions like Citigroup, Bank of America and Morgan Stanley from going under. But the TARP scheme was fraught with conflicts still bedeviling the debate over reform, including the problem of bankers paying themselves handsomely on the back of taxpayer bailouts. As a result, few are calling for a repeat of the TARP experience.

UK lawmakers seek radical, not rushed bank reform

BRITAIN    By Huw Jones
   LONDON, March 29 (Reuters) – Radical and carefully thought reform is needed to shield British taxpayers from having to bail out troubled banks again, a UK parliamentary report said on Monday. (more…)

Bernanke defends Fed small bank supervision role

   By Mark Felsenthal
   WASHINGTON, March 17 (Reuters) – Top U.S. central bankers present and past on Wednesday joined forces against a plan to strip the Fed of its oversight of smaller banks, saying the knowledge it gains from that role is vital to monetary policy. (more…)

UK move to limit bank branches irks global lenders

 By Kirstin Ridley

LONDON, Feb 17 (Reuters) – A quest by British regulators to protect local taxpayers by pruning the branches of global banks is riling the industry and risks running roughshod over a principle of free movement within Europe.

Britain’s Financial Services Authority (FSA), which unilaterally published tough new liquidity rules for banks last year, is keen to stop banks operating in London from setting up branches. It prefers subsidiaries, which are easier to police.

This push for “subsidiarisation” has gathered steam since the collapse of Icelandic banks in 2008 left UK depositors empty-handed, shattering a European principle that national regulators will protect the interests of international clients.

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