Who wouldn’t want to be a venture capitalist right now? Investment bankers may be reviled and private equity executives hammered but Silicon Valley’s billionaire elite can do no wrong.
For the world’s financial elite, now might be a good time to be on a Swiss mountainside, protected by a cordon of armed police, and able to take one’s mind off things by skiing and popping into a private bank.
Why hedgies are lobbying for lower walls
“Secretive hedge fund manager” is one of those adjectival pairings to rank with “flamboyant impresario” and “introverted computer programmer” as a journalistic cliché. So when I read the headline “Hedge funds lobby SEC over secrecy rule” in Monday’s FT, I naturally assumed the hedgies wanted the US regulator to erect even higher walls around them. Not so.
Colleague Sam Jones points out that at least part of the myth of secretive hedge funds is constructed on the regulatory legacy of rule 502(c) of Regulation D. This “arcane piece of Depression-era legislation… defines how the modern hedge fund industry operates”, outlawing general advertising and solicitation by funds but also making them paranoid about talking to any “unqualified outsiders”. The Managed Funds Association, the funds’ US lobby group, has written to the Securities and Exchange Commission seeking its elimination.
Hurrah for uncertainty! Three cheers for trepidation! As the world tiptoes gingerly into 2012, let’s celebrate the fallibility of forecasting and the perils of prediction.
Noyer should behave like a central banker
It’s never a good sign when politicians resort to nationalism, or start to complain about other countries. When a central bank governor does it, things must be bad.
Christian Noyer’s suggestion that ratings agencies should downgrade the UK before they downgrade France would be funny if it wasn’t for the fact that he is the governor of the Bank of France.
I can understand, and even be amused by, the knockabout spectacle of French politicians trying to counterattack against the threat of France losing its triple-A rating by criticising the Brits.
But a central bank governor who is supposed to be above the political fray and to co-operate with other monetary authorities in easing the financial crisis? It isn’t very dignified.
Corzine should have followed the money
The most breathtaking aspect of Jon Corzine’s prepared testimony to a Congressional committee on the collapse of MF Global is his claim to know little about clearing and settlement.
Mr Corzine’s defence for the missing funds at the commodities broker that he formerly headed is ignorance – that while he knew quite a lot about trading, he left the back office responsibilities to others.
He thus did not know about the missing funds at MF Global until the Sunday night of the weekend when he was trying to strike a deal to rescue the firm.
Despite the criticism that rating agencies have endured in the past three years – much of it justified – someone at Standard & Poor’s retains a sense of humour.
Enron: see no evil, hear no evil, speak no evil
Fraud did not directly trigger Enron’s bankruptcy 10 years ago. The underlying criminal conspiracy was only fully revealed later. Enron’s failure was, initially, due to a classic collapse in counterparty confidence. It was a death spiral – starkly familiar to everyone who watched the 2008 implosion of Lehman Brothers – that ended on December 2 2001.
It is too easy to blame the energy trader’s demise only on bad people doing bad deeds and fail to learn the lessons. Plenty of watchdogs that should have barked in 2001, if not earlier – directors, auditors and regulators, of course, but also rating agencies, Wall Street research analysts, investors and, yes, the media – kept quiet.
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John Gapper is an associate editor and the chief business commentator of the FT.
He has worked for the FT since 1987, covering labour relations, banking and the media. He is co-author, with Nicholas Denton, of All That Glitters, an account of the collapse of Barings in 1995.
Andrew Hill is an associate editor and the management editor of the FT. He is a former City editor, financial editor, comment and analysis editor, New York bureau chief, foreign news editor and correspondent in Brussels and Milan.
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