Financial Regulatory Forum

U.S. regulation risks a “Balkanization” of cross-border capital

By Henry Engler, Compliance Complete

NEW YORK, Mar. 12 (Thomson Reuters Accelus) - The term “unintended consequences” has often been used by critics of U.S. regulatory reform when characterizing its complexities. While well-intentioned individually, when unleashed in unison the multiple requirements banks that face become highly unpredictable, including across national borders. (more…)

Low interest rates can pose safety-and-soundness issues, state bank regulator says

By Ted Knutson

WASHINGTON, July 19 (Thomson Reuters Accelus) - The low interest rate environment being pushed by the Federal Reserve can pose safety and soundness issues for some banks, Michael Stevens, senior executive vice president of the Conference of State Bank Supervisors, told Thomson Reuters Accelus Wednesday.

“Low interest rates are a supervisory concern because they can have a corrosive effect on net interest margins, which impacts profitability, which impacts capital formation, which affects the ability to lend more and to grow,” said Stevens. (more…)

Financial regulation scorecard

A House-Senate conference committee must find a middle ground between financial regulation bills passed by the two chambers. The committee’s final report could differ from earlier versions.

Once approved by both chambers, the compromise legislation will go to President Barack Obama to sign it into law. That could happen by July 4, analysts say.

Here’s a look at the status of major points in the House and Senate financial regulation bills.

Market Structure Moves to Top of Regulatory Agenda

The SEC’s chief said the growing concerns about technological changes in the capital markets are going to drive much of the agency’s agenda for the rest of the year. She fears creation of a two-tier system—one for hedge funds and other large traders and a more limited tier for everyone else. Her goal includes passing a series of rules designed to update the basic principle of market fairness that was established at the agency’s founding during the New Deal, according to Thomson Reuters Checkpoint’s WG&L Accounting & Compliance Alert. (more…)

US Congress Looks for New Ways to Tax Financial Services

During a congressional hearing, lawmakers searched for ways to use the tax code to dampen short-term speculation in the financial markets and close the budget deficit. To fix the problem, they suggested changes in tax structures, including discounted capital gains tax for long-term investors, transaction tax, bank tax, and financial speculation tax, Thomson Reuters WG&L Accounting & Compliance Alert reports.

(more…)

UK finance executives worried by regulation – CBI

LONDON, Jan 18 (Reuters) – London’s status as a world financial centre is at risk due to a combination of rising regulation and global economic shifts, according to senior executives polled by Britain’s biggest business lobby.

London has emerged from the 2008 banking crisis but it faces fresh threats from a transfer of economic power to Asia, as well as potential unilateral regulatory action aimed at prevening a repeat of the financial meltdown, the Confederation of British Industry quoted company executives as saying in a report.

“London will lose market share, though it won’t diminish in importance,” Stephen Green, chief executive of HSBC, Europe’s biggest bank, told the CBI. “This is not because of the financial crisis, but because of shifts in the global economy.”

FACTBOX – 20 ways US House, Senate financial reforms differ

Jan 6 (Reuters) – The U.S. Senate will resume debate this month on financial regulation reform, focusing on proposals that differ in 20 key ways from comprehensive legislation approved last month by the U.S. House of Representatives.

A summary of the differences follows.

* RESOLUTION FUND. House bill creates $200-billion fund to help pay for Federal Deposit Insurance Corp (FDIC) actions to dismantle insolvent, non-bank financial firms.

Fund gets $150 billion from fees paid by firms with more than $50 billion in assets. Fee threshold for hedge funds is $10 billion. Fund can get $50 billion more if needed from Treasury borrowings.

Lloyds cash call moves focus to turnaround

By Clara Ferreira-Marques

LONDON, Dec 14 (Reuters) – Lloyds completed a record 13.5 billion pound ($21.9 billion) rights issue on Monday, ending a turbulent period for the bank and shifting investor focus to a potential government stake sale in 2010.

The discounted cash call — the world’s largest to date — is a key plank of a bumper capital raising effort worth over 23 billion pounds in total and aimed at helping Britain’s largest retail bank avoid a state-backed scheme for bad debts.

Lloyds Banking Group said on Monday 95.3 percent of the new shares offered were taken up by investors including the British government, which owns around 43 percent of the bank.

INTERVIEW – UK’s Darling backs U.S. bank capital plan

By Sumeet Desai and Matt Falloon
LONDON, Sept 4 (Reuters) – British finance minister Alistair Darling on Friday threw his weight behind U.S. proposals to strengthen the capital buffers of banks but said there were still differences of opinion among international policymakers.

(more…)

EU drafts sanctions for risky bonuses, tighter capital rules

Flags at EU Parliament
By Huw Jones
LONDON/BRUSSELS, July 13 (Reuters) – The European Union on Monday unveiled a new law that punishes banks who encourage too much risk-taking with their policies on pay, in an effort to put an end to the practices blamed for the credit crunch.
A draft law published by the European Commission tightens EU rules on bank capital and requires banks to improve disclosure of the holdings in securitised products, bidding to apply lessons from the worst financial crisis since the 1930s. (more…)

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