Bloggers on FT Alphaville are, from time to time, asked how we decide what topics or events to write about. This post is no tell all, but is rather an example of exactly how funny the road travelled can be.
The end of the road saw us reading about whether banks still can get much bigger (to fail), despite the regulatory and legislative efforts of the last few years, particularly in the US. What we found is that there’s a big escape clause in the legislation that makes us a bit queasy. Read more
Well, it’s a revolution! Apparently.
This is Goldman’s first report on its money market funds to disclose daily net asset values (h/t Tracy): Read more
UPDATE: A Treasury official got in touch with us after reading this post to explain a little more clearly what happens next.
First a bit of background. Dodd-Frank section 120 authorises the FSOC “to provide for more stringent regulation of a financial activity by issuing recommendations to the primary financial regulatory agencies to apply new or heightened standards and safeguards… if the Council determines that the conduct, scope, nature, size, scale, concentration, or interconnectedness of such activity or practice could create or increase the risk of significant liquidity, credit, or other problems spreading among bank holding companies and nonbank financial companies, financial markets of the United States.” Read more
On Friday, the Financial Stability Board published the provisional list of global systemically important financial institutions (G-Sifis).
This had been widely trailed but we’re still wrestling with a tricky question: Read more
It may have escaped your attention but on Tuesday afternoon the Financial Stability Oversight Council (FSOC) published its first annual report into the state of the US financial system. Click below for 160 pages of pdf fun:
The debt ceiling cacophony largely silenced coverage of the report, which was mandated by the Dodd-Frank Act to highlight any emerging threats to
the American way of life the US economy. Read more
It’s the question that’s seemingly stumped Tim Geithner: how to identify a priori systemically important non-bank financial institutions.
The Federal Reserve on Tuesday suggested further rules regarding who might be considered for attention by the Financial Stability Oversight Council (FSOC) as per section 113 of Dodd-Frank. In short, they need to be “financial” and “significant”. Read more
Merrill Lynch has agreed to pay $10m to settle allegations that its proprietary traders misused client information for their own strategies. reports the FT. The settlement with the SEC comes as US regulators move to limit financial institutions from investing on their own account. Several financial groups have begun spinning off their “prop” desks in anticipation of the new rules. The Financial Stability Oversight Council of regulators issued a study earlier this month acknowledging concerns that banks could disguise prop trading through market making activities for clients. Merrill, which was acquired by Bank of America in 2009, agreed to settle, without admitting or denying wrongdoing. DealJournal meanwhile examines some of the trades that landed Merrill in hot water. Read more
Those worried that Dodd-Frank was overly-cautious in tackling ‘Too Big To Fail’ issues are unlikely to be comforted by the concentration limits study released on Tuesday by the Financial Stability Oversight Council (FSOC).
Quick background — Dodd-Frank prohibited a financial company from merging with or acquiring another firm, if the result was a company with over 10 per cent of the “aggregate consolidated liabilities” of all firms. Read more
Big US financial groups are bracing for new restrictions on their businesses after regulators on Tuesday discussed higher capital charges for “systemically important” companies and a ban on proprietary trading at banks, the FT reports. In a study on the “Volcker rule”, which prevents banks from trading for their own account among other restrictions, the Financial Stability Oversight Council, chaired by Treasury secretary Tim Geithner, recommended that banks’ compliance departments first decide whether a trade is proprietary using a raft of metrics, followed by supervision from regulators and punishment for flouting the rules. In a separate move, the council of regulators moved closer to deciding which “non-banks” should be labelled as “systemically important”. Read more
The biggest US financial groups were braced for new restrictions on their businesses on Tuesday after regulators backed higher capital charges for “systemically important” companies and a ban on proprietary trading at banks, the FT reports. In a study on the “Volcker rule”, which prevents banks from trading for their own account among other restrictions, the Financial Stability Oversight Council, chaired by Treasury secretary Tim Geithner, recommended that banks’ compliance departments first decide whether a trade is proprietary using a raft of metrics, followed by supervision from regulators and punishment for flouting the rules. Read more
Look on the bright side, we now know which rules the rulemakers will follow to get us to the Volcker rule. Some of them, at least.
The Financial Stability Oversight Council on Tuesday released its six-month study into the Volcker rule and held its third public meeting. Read more
There’s something odd in this Wall Street Journal article about Tim Geithner’s meddling in the affairs of the independent regulators.
Not the infighting and turf wars within the Financial Stability Oversight Council — that was bound to happen sooner or later. Rather, it’s the specific issue in which Treasury apparently decided to involve itself that is peculiar. Read more