Financial Regulatory Forum

UK’s top financial regulator quits

Summer departure

Summer departure

By Kirstin Ridley and Clara Ferreira-Marques

LONDON, Feb 9 (Reuters) – Britain’s top financial regulator announced he was to step down, surprising markets and casting doubt over the future of the Financial Services Authority and an overhaul of the sector.

Hector Sants, a former investment banker well-respected in the industry, will leave the FSA just after a general election widely expected to leave the opposition Conservatives in power.

The Conservative Party, a long-time leader in opinion polls, has said it wants to abolish the FSA and hand its banking supervisory powers to the Bank of England, saying the regulator failed to spot problems ahead of the financial crisis and was unable to avert a costly bailout.

Sants, who will leave in the summer, said he had always planned to hold the post for three years. Industry insiders said he has been talking to colleagues about his departure for some months.

But the FSA did not outline a succession plan on Tuesday and said the process for picking a successor would be announced “in due course”. It remains to be seen whether Sants could be tempted to join a reshuffled regulator at a later date.

Financial reform talks break down in U.S. Senate

Dodd and Shelby, in happier times

Dodd and Shelby, in happier times

By Kevin Drawbaugh and Kim Dixon

WASHINGTON, Feb 5 (Reuters) – Bipartisan efforts to tighten U.S. financial regulation ground to a halt in the Senate on Friday, leaving Democrats to proceed on their own and painting Republicans into an uncomfortable political corner.

After months of public debate and closed-door talks, Senate Banking Committee Chairman Christopher Dodd, chief negotiator for the Democrats, said he is at an impasse with his Republican counterpart, Senator Richard Shelby.

Dodd said in a statement he will begin drafting new legislation to be considered later this month.

U.S. bank trading plan could create loopholes – EU official

By Huw Jones

LONDON, Feb 1 (Reuters) – U.S. President Barack Obama’s plans to curb proprietary trading will be hard to define and could create regulatory loopholes for banks to exploit, a top European Union official said on Monday.

Obama’s “structural” reform was very different to the regulatory approach adopted by the EU and globally via the G20 group of countries which focuses on toughening up the Basel bank capital rules, said David Wright, deputy chief of the European Commission’s internal market unit.

“This has not been done in the traditional way,” Wright said of the Obama plan.

Obama pushes jobs, vows to fight on after tough year

By Caren Bohan and Ross Colvin

WASHINGTON, Jan 28 (Reuters) – U.S. President Barack Obama pushed job creation to the top of his agenda and vowed not to abandon his struggling healthcare overhaul after a political setback that raised doubts about his leadership.

With the economy still weak and unemployment at a painful 10 percent, “Jobs must be our number one focus in 2010,” Obama told Congress in his annual State of the Union address on Wednesday.

Obama, who inherited a financial crisis and wars in Iraq and Afghanistan from the Bush administration, admitted he had made mistakes and that his first year in office had been a difficult one.

FACTBOX-Global regulators seek to plug supervision gaps

Jan 8 (Reuters) – A forum of global financial regulators put forward 17 recommendations on Friday covering supervision of hedge funds, credit derivatives and mortgages in a bid to plug supervisory gaps highlighted by the financial crisis.

The G20 group of countries, which is spearheading reform of financial regulation at the global level, asked the forum last November to come up with recommendations.

Policymakers saw flaws in how supervisors of securities, insurers and banks worked together, with some firms able to exploit gaps. The recommendations comprise a marked shift in the parameters of regulation and supervision.

Johnson seen taking over as U.S. Senate banking panel chief

By Karey Wutkowski and Rachelle Younglai

WASHINGTON, Jan 6 (Reuters) – South Dakota Democratic Senator Tim Johnson, a champion of community banks and credit card companies, is expected to take over the chairmanship of the influential U.S. Senate Banking Committee in 2011.

With the announcement on Wednesday by Connecticut Senator Christopher Dodd that he will not seek re-election in November, Johnson is next on the seniority list to lead the panel, which is in the midst of a debate over financial regulation reform.

In a flurry of speculation following Dodd’s news, financial services industry lobbyists and analysts said that the banking committee under Johnson would likely be more favorable to some business sectors than it has been under Dodd.

Banking chief Dodd to leave US Senate

By Thomas Ferraro and Steve Holland

WASHINGTON, Jan 6 (Reuters) – Veteran Democratic Senator Christopher Dodd,  leader of a financial regulation overhaul in the Senate, said on Wednesday he will not seek re-election in November in recognition that he faced an uphill battle and underscoring upheaval facing President Barack Obama’s Democrats.

Dodd, 65, chairman of the Senate Banking Committee, has been dogged by questions over his financial industry connections and was trailing badly in polls in his home state of Connecticut.

Dodd’s decision may well help Democrats hang on to his seat. Republicans conceded that Democratic chances would improve in the event that Connecticut’s attorney general, Richard Blumenthal, runs for the seat, and he told CNBC that he planned to do so.

Banking chief Dodd to leave US Senate – sources

By Thomas Ferraro

WASHINGTON, Jan 6 (Reuters) – U.S. Senate Banking Committee Chairman Christopher Dodd, a key player in still-unfinished work to overhaul U.S. financial regulations, will announce on Wednesday he will not seek re-election in November, two senior Democratic party aides said.

The news, coupled with another Democrat’s retirement announcement, underscored the fragility of the Democrats’ Senate majority, which is just enough to push President Barack Obama’s agenda past Republican procedural obstacles.

The aides offered no reason for Dodd’s decision, but it had been clear for months the Democratic lawmaker from Connecticut, dogged by questions over his financial industry connections, had faced the prospect of being voted out of office.

BREAKINGVIEWS-Advice to credit-default-swap regulators for 2010

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

By Richard Beales

NEW YORK, Jan 4 (Reuters Breakingviews) – Lawmakers and bank-bashers have pinned blame for the financial crisis — and in particular the collapse of American International Group — on the credit default swap (CDS) market. Changes to and tighter oversight of the giant market are needed. But action should address real, not imaginary, problems. Reuters Breakingviews offers some advice.

1) Don’t ban CDS instruments. They didn’t cause AIG’s downfall — poor risk management did. AIG built up exposure out of all proportion to its ability to cover losses. It was an old trader’s game: selling out-of-the-money options to bring in what looked like risk-free revenue — until the unthinkable happened and losses swamped all previous profits.

U.S. financial scandals seen sparking 2010 zeal

By Dan Margolies

WASHINGTON, Dec 29 (Reuters) – The year of the Ponzi scheme will be followed by heightened regulation and more aggressive prosecutions, experts say, as U.S. officials respond to past failures.

Bernard Madoff’s massive $65-billion fraud grabbed most of the headlines in 2009, but other schemes that paid early investors with money from new victims came to light as the recession dried up new money and Madoff-inspired vigilance boosted awareness.

As 2010 approaches, regulators and prosecutors are scrambling to uncover and pursue more fraudsters, while lawmakers seek to close regulatory gaps through legislation and give enforcement officials more resources.

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