Exclusive outtakes from industry leaders
The latest blame game circulating in Washington on financial regulation may end up with those who point fingers finding that they have three fingers pointing back.
During the debate on tightening financial regulations, there have been some backhanded jabs at regulators with the implication that perhaps they were asleep at the wheel. Just this morning on NBC’s “Today” show, Democratic Senator Claire McCaskill said Wall Street had been creating things just to bet on — “they were like the casino, but they had less regulation than Las Vegas.”
Well hold on. Who’s fault is that?
We asked Sheila Bair, chairman of the Federal Deposit Insurance Corp.
She said when it comes to regulating many of the complex over-the-counter derivatives, the blame actually fell into the lap of Congress which decided against putting them under the oversight of the SEC or CFTC or insurance regulators. And in fairness to Congress, the Federal Reserve and Treasury condoned that action, she said.
“On derivatives, Congress did that,” Bair said at the Reuters Global Financial Regulation Summit. “That’s all history now.”
Democrats and Republicans alike on Capitol Hill say they want to toss out the concept of “too big to fail” in the financial regulation reform they are tussling over. That way if a financial firm is going to go under, it will go under, with no thought for a taxpayer handout.
Since the concept of “too big to fail” has yet to be erased by law, and its demise yet to be tested by a failing financial institution, it was interesting to hear how Kansas City Federal Reserve Bank President Thomas Hoenig envisioned the financial industry without that concept to lean on.
Gary Gensler, chairman of the Commodity Futures Trading Commission, likes to go to the past — sometimes as far back as 1,000 years — to explain the financial situations of today.
For example, derivatives existed for 145 years, since the Civil War, and they became regulated in the 1930s, he said at a Reuters Global Financial Regulation Summit in explaining that derivatives need regulation.
And he wants people to be clear that the problems are with Wall Street, not banks.
from Funds Hub:
The vexing question of how much to tell retail investors about what exactly they are buying has been exercising industry participants at the Reuters European Funds Summit. Although the sentiment is for more transparency and simplicity, as exemplified by the EU's new two page marketing document, some managers feel this won't fully reflect the risks and processes involved in a product.
The Key Investor Information Document (KIID), to be rolled out under UCITS IV, will replace the little loved "simplified" prospectus as the primary document via which fund promoters communicate with prospective clients - something that makes some managers very uneasy.
from Funds Hub:
It is early days at the Reuters fund summit in Luxembourg, but already a few themes are building. For one thing, no one seems to be too negative about the investment climate.
For the most part, however, the attendees are focused on how the industry will recuperate from the battering it has suffered during the financial crisis. Again, there appears to be a degree of optimism. Most of the talk is about UCITS IV, which is fundspeak for a new kind of pan-European fund that is easier to distribute.
The drone that was formerly known as the unmanned aerial vehicle (UAV) has a new name — the Remotely Piloted Aircraft (RPA).
Air Force Secretary Michael Donley said Air Force leadership discussed it and made a commitment to use the new term, although it does take some getting used to. “The more we use it, the more comfortable we get with it,” he said in an interview at a Reuters Aerospace and Defense Summit.
Pratt and Whitney President David Hess says corporate jets got a bad rap from Washington and the rhetoric hurt the industry.
Remember the furor over automakers arriving for congressional hearings late last year in corporate jets to ask for bailouts? And how President Barack Obama and his administration was publicly angry that Citigroup was purchasing a $50 million plane while receiving government funds from the Troubled Assets Relief Program.
It’s the classic media story — and this one even involved a stint driving through nearly every little town in Texas, Arkansas, Oklahoma, Louisiana and Mississippi to sell this odd new 24-hour sports network to cable distributors.