Financial Regulatory Forum

ANALYSIS-New US circuit breakers trip, stumble on problems

By Jonathan Spicer

NEW YORK, July 2 (Reuters) – Abrupt halts in the trading of both Citigroup Inc and Washington Post Co shares over the last few weeks exposed some problems with new rules meant to avoid a repeat of the May “flash crash,” and may give traction to an alternative fix.

The halts came on separate days after erroneous trades were made in the shares, each time tripping new stock-specific circuit breakers that immediately stopped trading for five minutes.

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from The Great Debate:

Taxing spoils of the financial sector

If you want less of something, tax it.

That truism is often used as an argument against a tax on profits, or health benefits, or employment, but in the case of the rents extracted from the economy by the financial services industry here's hoping it proves more of a promise than a threat.

The International Monetary Fund has put forward two new taxes on banks to pay the costs of future rescues, one of which is a fairly conventional "Financial Stability Contribution," with an initial flat levy on all banks, to be refined later into something with more precise institutional and systemic risk adjustments.

More interestingly, the IMF is also proposing a "Financial Activities Tax," (FAT) a tax on bank pay and profits which, if correctly designed, could serve as a tax on rents -- the unwarranted spoils -- of the financial sector.

Citigroup settles dispute with New York state, extends “free” checking

By Jonathan Stempel

NEW YORK, Feb 1 (Reuters) – Citigroup Inc  has shelved plans to impose new fees on more than a million customers nationwide who took out “free checking” accounts with its Citibank unit, New York Attorney General Andrew Cuomo said.

The New York-based bank’s agreement with Cuomo’s office requires Citigroup to extend free checking through 2010 for consumers who signed up for its “EZ Checking” and “Access” checking accounts between Jan. 1 and Nov. 5, 2009. Citigroup will also not charge fees on checks through Jan. 31, 2011.

Cuomo said the bank had planned beginning on Monday to assess monthly fees, typically $9.50, plus per-check charges of 50 cents or $1 to account holders whose balances fell below $1,500. He said the settlement saves customers tens of millions of dollars.

U.S. watchdog probes firms’ trading tips – sources

NEW YORK/WASHINGTON, Dec 18 (Reuters) – The U.S. brokerage watchdog is probing how Wall Street firms, including JP Morgan Chase and Citigroup Inc, offer stock research, two people familiar with the probe said on Friday.

The Financial Industry Regulatory Authority, which supervises nearly 4,800 brokerage firms, sent letters to more than 10 firms in early November asking for information related to their unpublished research material, one of the people said.

The same person said FINRA is eyeing the firms’ policies related to their delivery of the unpublished research material. Both sources requested anonymity because the sweep has not been made public.

U.S. delays its $5 billion Citi sale after weak pricing

By Dan Wilchins and David Lawder

NEW YORK/WASHINGTON, Dec 16 (Reuters) – The U.S. Treasury delayed a plan to sell its $5 billion of Citigroup Inc shares after a stock offering by the bank attracted weak demand and priced at a much lower-than-expected $3.15 a share.

The bank sold $20 billion of stock and convertible bonds to repay funds it owes to the government so it can avoid the executive compensation restrictions that came with multiple U.S. bailouts.

But raising that capital came at a steep cost to shareholders, whose shares are worth 20 percent less than their closing level on Friday, before the bank announced its plan for repaying funds to the government.

Citi to raise $20 billion in capital to repay U.S.

By Dan Wilchins

NEW YORK, Dec 14 (Reuters) – Citigroup laid out a plan to repay the money it owes the U.S. government, including issuing about $20 billion of capital, as the bank looks to end the executive pay restrictions that came with the funds.

The deal will begin to dissolve what has been a troubled relationship between Citigroup and the government, which bailed out the bank with three rescues last year and this year but also pressured it to sell businesses and remove executives.

The transaction is also a sign of a shift in the financial crisis, as regulators worry less about injecting capital into banks to stabilize them and more about properly monitoring banks to prevent the next crisis.

US pay czar caps more salaries at bailed out firms

By Karey Wutkowski and Steve Eder

WASHINGTON/NEW YORK, Dec 11 (Reuters) – The U.S. pay czar on Friday expanded a crackdown on pay packages at four companies rescued with taxpayer money, limiting most cash salaries at $500,000 for a second tier of top earners.

The Treasury Department’s Kenneth Feinberg issued the new limits amid outcries from some companies on a government lifeline that they cannot retain or attract key employees, sending the firms racing for a bailout exit.

He set the compensation structures for the 26th through 100th highest-paid employees at four firms: Citigroup Inc, American International Group, General Motors Co, and GMAC.

Citi could sell $20 billion of shares soon to repay TARP – CNBC

NEW YORK, Dec 9 (Reuters) – Citigroup Inc plans to pay back TARP by raising money in an equity offering that could be announced as early as Thursday and could be some $20 billion, television network CNBC reported, citing sources.

Earlier on Wednesday, the bank’s chairman, Dick Parsons, told CNBC that Citigroup was in talks with regulators about repaying the funds it received from the U.S. Treasury’s Troubled Asset Relief Program.

“We believe Citigroup is in a position to repay the TARP money, but there is an active discussion we have to have with regulators …” said Parsons, who was at New York Governor David Paterson’s speech on the economy on Wednesday at the Museum of American Finance.

U.S. pay czar may issue rulings before Oct. 30 deadline

By Karey Wutkowski
WASHINGTON, Oct 20 (Reuters) – The Obama administration’s pay czar said on Tuesday he may publicly release his rulings on the compensation packages for top earners at bailed-out firms before his Oct. 30 deadline.

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U.S. rebuffing big banks’ push to exit bailout early

By Karey Wutkowski and Steve Eder
WASHINGTON/NEW YORK, Sept 15 (Reuters) – Some of the largest U.S. banks will remain in the government’s financial bailout program for months, as officials do not expect to grant the next wave of exit approvals until near the end of the year, according to a source familiar with the matter. (more…)

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