regulation

In short, no. The new proposal would shift some responsibility for bankers’ risk-taking onto bank management. And that idea is bang on time.

Banks offering big bonuses for high risk trading would have to pay more to insure deposits, under a proposal passed by a US regulator yesterday. Banks with more cautious pay policies, such as bonus clawbacks, would pay less. Read more

The Central Bank Governors and Heads of Supervision yesterday welcomed progress made by the Basel Committee on Banking supervision, suggesting five areas of particular focus for the banking standards expected by the end of this year.

The Group of Central Bank Governors and Heads of Supervision (“the Group”) is the oversight body of the Basel Committee on Banking Supervision and comprises the same member jurisdictions. Read more

A report requested by the G20 recommends hedge funds should be subject to minimum risk measurement standards and reporting requirements. Minimum initial and outgoing capital requirements should be imposed on systemically relevant hedge funds.

The Joint Forum – an international panel from the banking, insurance and securities industries – has released its report snappily named the “Review of the Differentiated Nature and Scope of Financial Regulation”. It is 132 pages of assessment and recommendation on the regulation of the financial sector. The Forum found surprising and growing levels of convergence in regulation. But it points out areas of risk and makes 17 recommendations, summarised below. Read more

Ralph Atkins

Jean-Claude Trichet, European Central Bank president, is giving evidence in the European parliament. His message on the eurozone economy is the same as at his press conference last Thursday: things are improving but he’s still cautious. Steps taken to unwind emergency liquidity support measures had “no meaning” for the ECB’s interest rate policy.

The questioning is yielding some interesting twists, however. So far Mr Trichet has expressed disappointment at last week’s compromise deal over new European Union supervisory structures.  “It is not our first best” solution, he said, but Read more

A single banking regulator for the US has just been proposed by a key Senate committee. The suggestion is not new. A single regulator was suggested in 1993 by then treasury secretary Lloyd Bentsen, following a wave of thrift and bank failures. The proposal, to consolidate all four federal banking regulation and supervision agencies, went nowhere.

Sixteen years later, the Obama administration proposed to reduce the four agencies to three, by eliminating the Office of Thrift Supervision through consolidation with the Office of the Comptroller of the Currency. But critics argued this would “allow financial groups to continue to shop for the weakest regulator”Read more

Bad news for RBS, less-bad-than-recent news for the United States, and good news for Asia, all rounded off with a warning on asset bubbles. And the market price of water in Yemen has quadrupled in four years Read more

The IMF has issued a warning about asset price bubbles forming in Latin America, echoing concerns about bubbles in East Asia. As regulators and legislators in the US and UK argue over the best way to prevent another Lehman’s, the US government enters into a new $5.6bn bail-out Read more

Ralph Atkins

Ralph Atkins of the Financial Times discusses Jean-Claude Trichet’s thoughts on the euro and European regulation Read more

Chris Giles

Another good speech by Andy Haldane, the Bank of England’s head of financial stability. Noting that the word trust derives from the same latin root as credit (as our colleague Gillian Tett pointed out months ago), he asks how the financial services sector can best regain trust. Smaller, more local, perhaps mutual and certainly more diverse banks is his answer for the long term. Unlike the G20, he is not too keen on regulation as a panacea (word cloud of his speech to the left).

“One reason why regulation might not be the whole answer is that trust in financial regulation is itself one of the casualties of crisis.”

And before trust is restored with the private sector, he recognises the public sector will have to step in. Read more