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Jun 27, 2012
via Breakingviews

Wall Street defeated by Ivory Tower in Virginia

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By Martin Hutchinson and Megan Miller
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Wall Street’s latest defeat has taken place far from the canyons of downtown Manhattan on the Palladian campus of the University of Virginia, and by an unlikely adversary – the ivory tower. The school founded by Thomas Jefferson reinstated Teresa Sullivan as president on Tuesday, overturning an ouster supported by hedge fund titan Paul Tudor Jones and former Goldman Sachs executive Peter Kiernan. But victory may be pyrrhic. For UVA to thrive in a bleaker fiscal world, the paradigm shifts Sullivan resisted look unavoidable.

Jun 22, 2012

Bank regulators should get heavy on risk-weighting

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

By Martin Hutchinson

NEW YORK, June 22 (Reuters Breakingviews) – It’s time for
bank regulators to get heavy on risk weighting. The financial
and euro zone crises have shown the drawbacks of using banks’
home-grown models to weigh different risks. These encourage
unhealthy arbitrage by favoring assets that enjoy favorable
treatment. A tougher cap on the ratio of equity to total assets
would limit abuse. So would banning risk measures that ignore
extreme events.

Jun 22, 2012

BREAKINGVIEWS:Bank regulators should get heavy on risk-weighting

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

By Martin Hutchinson

NEW YORK, June 22 (Reuters Breakingviews) – It’s time for
bank regulators to get heavy on risk weighting. The financial
and euro zone crises have shown the drawbacks of using banks’
home-grown models to weigh different risks. These encourage
unhealthy arbitrage by favoring assets that enjoy favorable
treatment. A tougher cap on the ratio of equity to total assets
would limit abuse. So would banning risk measures that ignore
extreme events.

Jun 18, 2012
via Breakingviews

NYC plan needs Financier Bloomberg not Mayor Mike

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By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

New York City needs Mayor Michael Bloomberg to seek counsel from the billionaire financier Michael Bloomberg. Privatizing some 90,000 parking spaces, an idea the city is considering, could raise billions of dollars to head off looming budget deficits. But other similar deals have sacrificed long-term revenue for short-term relief. Political expediency should take a backseat in the Big Apple. A joint venture would work better.

Quick fixes can be hazardous. Chicago’s Mayor Richard Daley, for example, sold 75 years worth of parking revenue for almost $1.2 billion in 2008. Though the city has retained the right to set rates, annual revenue has nearly quadrupled, to $80 million, mostly under new management, between 2007 and 2011. The arrangement balanced the city’s budget in Daley’s last year in office but has been very unpopular because of the results.

Jun 14, 2012
via Breakingviews

Middle-class American dream needs less real estate

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By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The middle-class American dream has taken a hit from real estate. According to the Federal Reserve’s new triennial survey of family finances, U.S. families in the middle income bracket lost 29 percent of their net worth between 2007 and 2010 in real terms, with the median household left with $65,900 of net assets. The plunge in home values was largely to blame. Yet the rich got richer, helped by tax deductions for retirement accounts and mortgage interest that make it cheaper for them to save. Policy can help redress the balance.

Jun 13, 2012
via Breakingviews

National breakups don’t work like corporate ones

By Martin Hutchinson

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

The recent attempt by Malian rebels to split their country is not wrong in principle. With good will and support from the rest of the world, some national partitions – not unlike corporate breakups – produce smaller, better-governed and more prosperous nations. But military force makes such results rare and disasters all too common.

Jun 11, 2012
via Breakingviews

Citi looks too accident-prone to make it to 300

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By Martin Hutchinson

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

Happy 200th birthday Citigroup – shame you are unlikely to make it to 300. At the very least, it’s hard to envision the accident-prone New York bank will make it to 2112. Founded in 1812 as the City Bank of New York, Citi’s first century was more successful than the second. By 1912 Citi was the largest U.S. bank with worldwide operations, a top-three underwriting business and one near-death experience, in 1837. Since then it’s had several costly expansions and four more near-fatalities.

Jun 11, 2012

BREAKINGVIEWS:Citi looks too accident-prone to make it to 300

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

By Martin Hutchinson

NEW YORK, June 11 (Reuters Breakingviews) – Happy 200th
birthday Citigroup (C.N: Quote, Profile, Research) – shame you are unlikely to make it to
300. At the very least, it’s hard to envision the accident-prone
New York bank will make it to 2112. Founded in 1812 as the City
Bank of New York, Citi’s first century was more successful than
the second. By 1912 Citi was the largest U.S. bank with
worldwide operations, a top-three underwriting business and one
near-death experience, in 1837. Since then it’s had several
costly expansions and four more near-fatalities.

Jun 6, 2012
via Breakingviews

Wisconsin puts proactive policies back on the map

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By Martin Hutchinson and Daniel Indiviglio
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Governor Scott Walker’s victory in Wisconsin’s recall election has put proactive policies back on the map. The victory affirms his 2011 union-curbing budget reforms, suggesting that well-designed controversial policies are far from doomed. That’s good news for politicians of all hues battling Washington’s gridlock.

Jun 4, 2012

Pick-a-pay creator follows dodgy product to grave

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

By Martin Hutchinson

NEW YORK, June 4 (Reuters Breakingviews) – Marion Sandler
has died at the age of 81. She was already a rare female success
story on Wall Street when she bought Golden West Financial in
1963 with her husband Herb. The couple then built the thrift
into one of America’s most efficient mortgage lenders and sold
to Wachovia for $24 billion at the top of the market in 2006.
But it’s as the architects of the pick-a-pay loan that she and
her husband will be remembered.

    • About Martin

      "Martin Hutchinson is a Reuters Breakingviews columnist and writes about emerging markets, particularly in Latin America, and monetary and macroeconomic issues. He is a former merchant/investment banker with 27 years of experience."
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