Financial Regulatory Forum

SOPA, FATCA and the Volcker Rule: the border busters

By John Mackie (Canada)

(Business Law Currents) – The global nature of business has perhaps never been more evident than in the wake of the U.S. housing crisis, the natural disasters in Japan and the ongoing European sovereign debt ruckus. Industries and national economies do not exist in a vacuum, nor do the regulatory changes which nations seek to implement in order to address widespread concerns.

The most recent example of the “extraterritorial” impact of a nation’s laws is a rule being promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). Released last October, the Volcker rule is a proposal to prohibit proprietary trading and hedge or private equity fund investments by banking entities. (more…)

U.S. Treasury nominee: some swaps may stay off exchanges

WASHINGTON, March 2 (Reuters) – The nominee for the U.S. Treasury’s top domestic post on Tuesday said he believed certain derivatives contracts, such as dollar swaps, could be exempted from being traded on exchanges under Obama administration proposals to boost market transparency.

Jeffrey Goldstein, who was named in July 2009 to become Treasury undersecretary for domestic finance, told the Senate Finance Committee that the administration’s market reform proposals would prevent abuse and promote transparency, but there were certain cases where derivatives might be better off not traded on exchanges.

“I think that the exemptions would be in certain markets where you could adversely affect the trading of some important securities — including the dollar swaps, and other things,” Goldstein said, answering a question during a confirmation hearing. He added that he looked forward to examining the issue further with lawmakers.

US Treasury to sell warrants to buy Bank of America stock

WASHINGTON, March 1 (Reuters) – The U.S. Treasury Department said on Monday it will auction off 272.17 million warrants to buy stock in Bank of America Corp later this week.

The Treasury said the auction of warrants, which it received in return for pumping taxpayer capital into the company, would be auctioned on March 3, with Deutsche Bank Securities Inc as the sole book-running manager.

The warrant auction will be divided into two groups, the Treasury said.

Bidders will be able to place bids at any price increments of $0.05 for the first group totaling 150.38 million known as “A” warrants at or above the minimum bid price of $7 per warrant.

Volcker urges U.S. curbs on big banks’ risky trades

By Kevin Drawbaugh and Rachelle Younglai

WASHINGTON, Feb 2 (Reuters) – White House economic adviser Paul Volcker urged Congress on Tuesday to rein in risky investing by big banks to prevent them from becoming “too big to fail.”

The former Federal Reserve chairman — a sage of monetary policy and crusader for tighter regulation whose star is rising in the Obama administration,– faced questions from lawmakers about President Barack Obama’s latest proposals affecting big banks.

Obama stunned financial markets in late January by calling for new limits on banks’ ability to do proprietary trading, or buying and selling of investments for their own accounts unrelated to customers.

Trading curbs should apply to all banks – U.S. Treasury’s Wolin

WASHINGTON, Feb 2 (Reuters) – Commercial banks should not be allowed to establish or maintain a separate trading desk, capitalized with their own resources and unrelated to customer business, a top U.S. Treasury official said on Tuesday.

At a hearing to examine a White House proposal to restrict banks’ proprietary trading, Treasury Deputy Secretary Neal Wolin said banks should not be allowed to use such trading desks to speculate on the price of oil, gas or equity securities.

In January, the Obama administration proposed limiting commercial banks’ ability to engage in proprietary trading or do business with a hedge fund or private equity fund.

US Treasury delays first step in new capital rules

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.

Treasury to dole out $3.8 billion to GMAC, raise stake

By Karey Wutkowski and Corbett Daly

WASHINGTON, Dec 30 (Reuters) – The U.S. is injecting another $3.8 billion into GMAC Financial Services to help cover mortgage losses, in a bailout that makes the government the majority owner of the auto and home finance company.

GMAC said after the capital infusion it does not expect to record more major losses from its mortgage lending unit, which should help stabilize results.

The company is one of the largest car loan makers in the United States, and earning profit will give it more capacity to make loans and eventually pay back the government.

BREAKINGVIEWS-US forges risky new weapon for mortgage battle

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

By Rolfe Winkler

NEW YORK, Dec 29 (Reuters Breakingviews) – Uncle Sam is adding a risky new weapon in its battle to shore up the housing market. Granted, the latest Standard & Poor’s/Case-Shiller figures showed a fifth month of improvement. But analysts had already discounted that, expecting prices to fall 10 percent or more next year as various government supports are wound down.

The Treasury’s Christmas gift of almost unlimited support for Fannie Mae and Freddie Mac might be able to fend some of that off. But it will be a tough fight. A housing tax credit — of up to $8,000 for first-time buyers — ends in April. Meanwhile, the Federal Housing Administration plans to tighten its loose lending standards as its reserve fund has dwindled.

Wells Fargo sells $10.65 billion in stock to exit TARP

A U.S. flag flies above Wells Fargo & Co headquarters in San Francisco, California, April 22, 2009. NEW YORK, Dec 15 (Reuters) – Wells Fargo & Co sold $10.65 billion in stock on Tuesday, raising funds to help repay a $25 billion bailout received from the U.S. government last year.

Wells Fargo and Citigroup Inc — which expects to raise $20 billion on Wednesday to help repay its bailout money — were the last of the largest banks to repay the funds, which were forced on banks amid the height of the financial crisis last year.

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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.

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