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regulatory anachronisms? March 31, 2008

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Why does the antiquated term blueprint feature in the title of a document which purports to be about regulatory modernization?

financial regulation reform March 31, 2008

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Announcing a hodge-podge of proposals for financial regulation in the US today (the full report is here), which grew out of the concerns about US market competitiveness post Sarbanes-Oxley, Henry Paulson said:

As recent events have demonstrated, investor protection and market stability are critical elements of competitiveness. Far from being at odds with one another, they are mutually reinforcing.

But as part of the short term planning involves eliminating the OTS (which last August proposed a new approach to dealing with unfair or deceptive acts or practices (see e.g. the objections of the New York Bankers Association)) and transferring its functions to the OCC which was the favoured regulator for banks trying to avoid state predatory lending regulation, this looks as though the competitiveness focus means helping financial firms rather than their customers. And combining the CFTC and the SEC – which seems to be designed to emphasise the CFTC’s approach to regulation – is also designed to be friendly to firms. Competitiveness is often code for getting rid of rules. On the other hand there are rules which don’t do much other than impede useful competition.

Longer term there is a (triple peaks?) model which:

holistically addresses the inadequacies of the current functional regulatory system… An objectives-based regulatory approach best represents the optimal regulatory structure for the future. The structure will consist of a market stability regulator, a prudential regulator and a business conduct regulator with a focus on consumer protection.

Recations are mixed, for example, over the weekend, SIFMA said non-committally that the plan was thoughtful and sweeping. The Financial Services Roundtable is more enthusiastic and has applauded the proposals.

fsa post northern rock recommendations March 26, 2008

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The FSA published some sections of its report on Northern Rock today, including its 7 high level recommendations for the future supervision of “high impact” firms:

• FSA senior management to have increased engagement with high impact firms;
• FSA to increase the rigour of its day to day supervision;
• FSA to increase its focus on prudential supervision, including liquidity and stress testing;
• FSA to improve its use of information and intelligence in its supervision;
• FSA to improve the quality and resourcing of its financial and sectoral analysis;
• FSA to strengthen supervisory resources; and
• FSA senior management to increase the level of oversight of firms’ supervision.

The FSA management response describes some of the ways in which the FSA is addressing the issues. The “profile of prudential risk management and business analysis in the FSA will be enhanced” by turning the risk review department into a division. However:

Our supervisory framework is not designed to ensure that any given institution cannot fail. Rather, it remains a balance between seeking to mitigate risk, particularly to consumers and market stability, while fostering innovation and competition (which by definition involve risk).

All of which just seems to raise more questions.

lobbying and experts in the eu March 25, 2008

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ALTER-EU, the Alliance for Lobbying Transparency and Ethics Regulation in the European Union, has published a very critical report on the EU’s use of expert groups.

The report makes the following recommendations:

The European Commission ought to reform the mechanisms by which it accesses expertise. It should ensure such mechanisms are both transparent and operate fairly. For the latter to be the case, different points of view must be balanced against one another where impartial scientific advice is sought in an atmosphere immune from corporate capture. Taking the following steps in relation to the Expert Groups would be a long overdue move in this direction:
1.Disclosure of Expert Group membership and key documents;
2.Full transparency around the launch of new Expert Groups;
3.Open and fair processes around the application for and selection of membership;
4.Strong safeguards against privileged access and unbalanced composition of these groups;
5.Dissolution of all Expert Groups controlled by industry (or any other special interests);
6.A broad review on the composition of all Expert Groups by the Commission’s Secretariat General.

youtube and governmental authorities March 24, 2008

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The UK Government has been posting videos on youtube for a while now, and the Treasury now (for about a month) has its own youtube channel, almost as exciting as the one for 10 Downing Street. The whole initiative has (justifiably) garnered more criticism than praise. Perhaps it’s a Scottish thing – although David Miliband of the Foreign Office (which also has a channel) isn’t Scottish, Jim Murphy, the Minister for Europe, is. The Scottish Executive has a channel too. But they can’t keep up with the Royal Channel for viewers and they are not so gutsy as the EU which has some quite provocative content on its channel, such as this video on ending child poverty in Europe:

workshop on the regulation of the practice of law March 17, 2008

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The School of Law of the University of Miami, in cooperation with the Miami-Florida European Union Center of Excellence, a partnership with Florida International University, and the Jean Monnet Chair, cordially invite you to a workshop:

Law Practice in the European Union and the United States
Friday, April 4, 2008, 9:00am-11:00
(breakfast will be served at 8:00am )
Faculty Room, School of Law Library, 4th Floor

Chair: Caroline Bradley, University of Miami School of Law

John Flood, University of Westminster, United Kingdom
“Will there be fallout from Clementi? The global repercussions for the legal profession after the Legal Services Act 2007”

Ramon Mullerat, KPMG Abogados/University of Barcelona Law School
“Different approaches of civil law and the common law lawyers in Europe and the United States, regarding litigation and arbitration”

Comments: Robert Rosen, University of Miami School of Law

For reservations: Tara Lora tlora@law.miami.edu
Phone: 305 284 4210
For information on the EU Center:
Astrid Boening

socio-legal studies association conference March 16, 2008

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This week I’m going to the SLSA conference this week, in my hometown, Manchester. I’ll be talking about the paper I am working on (slides here) which looks at Wells Fargo’s Stagecoach Island as a vehicle for financial education.

britishness defined: monolingualism March 15, 2008

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Odd to see via the BBC that Cambridge University is to stop requiring applicants to have a language GCSE when the EU (of which the UK is still a member) institutions insist on multilingualism. Cambridge decided that:

having a formal entry requirement that at least half of all GCSE students are unable to meet “was not acceptable in the context of Cambridge’s commitment to widening participation and access”.

As a practical matter English will take you a long way, but still …

reactions to pwg recommendations March 14, 2008

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The New York Times pans the PWG’s recommendations, pointing out that the recommendations rely on the existing structures and institutions which allowed the financial markets crisis to develop. The editorial ends:

Until the broad statements are backed up by firm detail — and a serious and urgent commitment to regulatory reform — the entire effort is more public relations than policy making.

This is clearly right – the details will matter. But it’s not surprising at multiple levels that the PWG would produce a rather predictable and unambitious set of proposals for financial market regulation at this point. For one reason, policy makers tend to take the view that one of the crucial objectives of financial regulation is maintaining confidence in the financial markets (fraud prevention is often justified by the need to maintain confidence rather than because fraud is inherently a bad thing). Appearing to be acting may be just as useful as acting in this confidence game. Plus there is a huge amount of lobbying energy directed to stopping regulation interfering with the markets – for all of the good and the bad that follows.

consumer protection – eu style March 13, 2008

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A Finnish online game, called Galactor, won the European Consumer Campaign of the Year Award. It’s a bit creepy with cockroaches wandering all over the screen. Ireland’s financial regulator won the best financial campaign deisgnation with a campaign that included a (not) scarymoney monster and an ad set on a bus which has produced lots of reenactments shown on youtube. Here’s the original:

And here’s one of the re-enactments: