Financial Regulatory Forum

By Rachel Wolcott

NEW YORK/LONDON, Dec. 22 (Thomson Reuters Accelus) - Considering the cost of the financial crisis to the American taxpayer — anywhere between $700 billion and $12.8 trillion depending on who you talk to — the proposed capital rules the Federal Reserve published yesterday seem pretty lenient, compare to those mooted by some European countries.

However, it is a certainty that the same U.S. bank CEOs who have been so vociferous in their criticism of any increase in capital requirements, will continue their efforts to pare down the amount of capital they are required to hold. (more…)

By Emmanuel Olaoye

NEW YORK, July 20 (Thomson Reuters Accelus) – Any downgrade in the U.S. government’s credit rating stemming from a failure to raise the debt limit would make it harder for American banks to raise capital at a time that they are facing higher capital requirements, banking experts and industry representatives warned. (more…)

By Anat Admati, guest columnist. The views expressed are her own

PALO ALTO, California, June 15 (Thomson Reuters Accelus) -

Dear JPMorgan Chase Directors

I own some JPMorgan Chase (JPM) shares through mutual funds in my retirement account. I have read Mr. Dimon’s recent letter to shareholders and some of his public comments. I write to urge you to reconsider JPM’s actions related to capital regulation. For the overall economy, as well as for JPM, these actions are misguided. (more…)

By Steve Slater

LONDON, Aug 13 (Reuters) – Some of Europe’s banks are faced with the unusual problem of holding too much cash as they try to lift sluggish returns, and few will dare to eat into capital until well into 2011 amid an uncertain regulatory outlook.

A jump in profits may have prompted banks like HSBC and Barclays to talk about improving returns for investors, but the financial crisis is too fresh in the memory for regulators and bank bosses.

(more…)

By Kevin Drawbaugh

WASHINGTON, June 7 (Reuters) – Negotiators from the U.S. Senate and House will begin meeting this week to craft a final Wall Street reform bill, with banks facing changes that threaten their profits, if not their business models.

Some congressional Democrats want to fashion a bill that forces a basic banking industry restructuring, but leaders will have to balance that agenda against the need to forge compromise legislation that retains some Republican support.

Analysts are expecting that fundamental restructuring will be avoided, “This bill is more about profitability and less about viability. That means the legislation will hurt the banking sector, but it will not sink it,” said Jaret Seiberg, a policy analyst at investment firm Concept Capital.

By Steve Slater and Alex Chambers

LONDON, May 28 (Reuters) – This week’s market jitters that banks were heading back to the darkest days of 2008 look overdone because lenders have vastly improved their assets and central banks stand ready with abundant funding.

Bank of Spain’s bailout of a small regional bank has brought back the spectre of another systemic crash after the demise of Lehman Brothers in 2008, this time on concerns about the financial sector in the euro-zone’s periphery.

But the conclusion is too hasty, analysts said — and a recovery in markets since the middle of the week is confirming that view.

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.

By Kevin Drawbaugh

WASHINGTON, April 25 (Reuters) – If the U.S. Congress approves financial regulation reform — and that looks likely to happen soon — banking stands to become a duller business.

On the “out” list will be unrestrained trading desks spitting out exotic debt instruments. On the “in” list will be the banker trying to find a solid 30-year fixed-rate mortgage for borrowers with good income.
(more…)

BRUSSELS, April 7 (Reuters) – The European Union (EU) is embarking on an overhaul of financial services that politicians hope will send bankers back to their roots of no-frills lending to households and business.

Michel Barnier is the EU commissioner in charge of the shake up on regulations ranging from curbs on banker pay to a clampdown on speculators betting on government debt.

Here is a guide to the overhaul:

* One of Barnier’s priorities is writing a rule book for trading derivatives, a financial instrument whose value is linked to an asset such as a government bond or currency.

By Karey Wutkowski

WASHINGTON, Jan 20 (Reuters) – The U.S. Treasury Department has missed the first deadline in its work to draft tougher capital standards, raising questions about the timeline of international efforts to ensure stronger bank balance sheets.

Treasury had given itself until the end of 2009 for an internal working group to produce a report assessing existing capital requirements.

The report is expected to inform the department as it tries to reach a domestic and then international agreement on stricter capital and leverage standards.