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fsa on responses to turner review September 30, 2009

Posted by Bradley in : financial regulation , comments closed

The FSA has published its report on reactions to the Turner Review (and accompanying discussion paper). The FSA reports that it received 81 responses (which it characterises as being “of a high standard”!) and states that:

… London’s reputation as a financial centre will be enhanced by a strong and effective regulatory framework, implemented robustly by FSA supervisors. Some have argued that the FSA should be very sensitive to the impact of any new regulatory proposals on London’s attractiveness as an international financial centre. While the FSA is certainly required (and will continue) to have regard to ‘the international character of financial services and markets and the desirability of maintaining the competitive position of the United Kingdom’, this is only one of a number of considerations that the FSA is required to take into account…More importantly, the FSA’s overriding concern is to achieve its statutory objectives, in particular maintaining market confidence and protecting consumers. An effective regulatory regime that delivers those objectives is the FSA’s highest priority.”

not a surprise – evidence that bank financial statements are misleading September 28, 2009

Posted by Bradley in : disclosure , comments closed

Harry Huizinga & Luc Laeven, Accounting Discretion of Banks During a Financial Crisis, IMF Working Paper 09/207 (Sep. 2009):

In the present crisis, the financial statements of banks appear to overstate the book value of assets to the point of becoming misleading guides to investors and regulators alike.. Thus, the present crisis can be seen as a ‘stress test’ of the accounting framework that reveals that book valuation need not always reflect the best estimate of asset value, especially at a time of sharp declines in market values. Accounting reforms announced so far and discussed in this paper, however, seem to go in the direction of increasing the gap between book and market values. This may be testimony that bank interests weigh heavily in this debate.

bank of england payment systems consultation September 28, 2009

Posted by Bradley in : financial regulation , comments closed

The Bank of England, exercising its functions with respect to payment systems under the Banking Act 2009, seeks comments (by October 30th) on its draft principles for recognised payment systems. The principles are pretty broadly drafted so it’s not very clear what they require. The Bank proposes to let system operators know what is required of them and to engage in regular risk reviews of payment systems. I’m not sure how reassured (or otherwise) to be about the statement that:

The Bank aims to follow a fair, reasonable and transparent process in the exercise of its powers, taking account of all relevant considerations.

g20 progress ? September 26, 2009

Posted by Bradley in : financial regulation , comments closed

It’s not entirely clear how meaningful any of this is yet, but there’s much more detail in the G20 leaders’ statement than in the crisis-related statements that came out of earlier meetings. There are some small commitments to the reform of governance of the IMF. And the statement links to the work of the Financial Stability Board, with approval of some of the details, for example with respect to compensation. The FSB published reports yesterday on improving financial regulation, improving stability, and on compensation.

The leaders’ statement claims that progress has been made in improving financial regulation:

Since the onset of the global crisis, we have developed and begun implementing sweeping reforms to tackle the root causes of the crisis and transform the system for global financial regulation. Substantial progress has been made in strengthening prudential oversight, improving risk management, strengthening transparency, promoting market integrity, establishing supervisory colleges, and reinforcing international cooperation. We have enhanced and expanded the scope of regulation and oversight, with tougher regulation of over-the-counter (OTC) derivatives, securitization markets, credit rating agencies, and hedge funds.

But the FSB suggests that it is nervous about some of the domestic developments in these areas. For example, with respect to CRAs the FSB notes:

Attention is needed to avoid requirements coming into place in different jurisdictions that have features that fragment rating markets or impose unnecessary burdens on CRAs.

scamming the scam victims September 23, 2009

Posted by Bradley in : consumers , comments closed

Among the usual set of emails I get inviting me to share in the estate of someone I have never heard of or funds illicitly hidden somewhere and discovered, today I received a rather more ironic solicitation of personal information. The text reads:

The BRITISH High Commission in Nigeria,Benin Republic,Ghana and Bokinafaso received a report of scam against you and other British/US citizens and Malaysia,Etc. whom the country of Nigeria/Benin,Bokinafaso And Ghana have recompensed you due to meeting held with Four countries Government and the world high commissions against fraud activities by the Four country Citizens
Your name was among those scammed as listed by the Nigeria Financial Intelligent Unit (NFIU).A compensation has been issued out in ATM DEBIT CARD to all the affected victims and has been already in distribution to all the bearers. Your ATM CARD was among those that was reported undelivered as at last Friday and we wish to advise you to see to the instructions of the Committee to make sure you receives your ATM CARD immediately for your usage.

eu pre-g20 announcements September 23, 2009

Posted by Bradley in : eu , comments closed

After stating its priorities for the upcoming G20 meeting, which begins tomorrow in Pittsburgh, the EU announced today some new proposals to improve financial regulation in Europe by establishing a European Systemic Risk Board and a European System of Financial Supervisors (which will involve changing the existing sectoral committees into authorities). The detailed texts are not yet available.
Update: the texts are available here and I have added them to the EU page here).

bernard oxman inaugurates um law international law lecture series September 22, 2009

Posted by Bradley in : events , comments closed

September 29th, 2009, 12.30-1.50 pm
Professor Bernard Oxman, Richard A. Hausler Professor of Law; judge ad hoc of the International Court of Justice; judge ad hoc of the International Tribunal for the Law of the Sea; Co-Editor in Chief of the American Journal of International Law, reflects on his service on the International Court of Justice
Location: Reading Room (Law Library) D201 – 12:30-1:50p.m.
Lunch provided

the sec and regulation of credit rating agencies September 18, 2009

Posted by Bradley in : financial regulation , comments closed

The SEC announced a bunch of new rules on rating agencies (details to be provided later). And the SEC will be seeking views on further de-emphasis of ratings in regulations and on the liability issue. Meanwhile, in the EU, Charlie McCreevy, discussing the reform of financial regulation notes the EU’s actions in this area and claims that the G20 is “broadly on the same line” as the EU on a range of matters, including CRAs. Of course, the EU’s role in regulating CRAs is a bit odd given that the dominant agencies are based in the US. On the other hand, the SEC’s Inspector General’s report on the SEC’s feeble oversight of NRSROs may suggest that a bit of a push from elsewhere, as well as some domestic political attention, is necessary to encourage the SEC not only to focus on developing appropriate rules, but also to apply the rules it does adopt.

sec enforcement as seen by judge rakoff: not a pretty picture September 15, 2009

Posted by Bradley in : financial regulation , comments closed

Judge Rakoff’s decision not to approve the proposed consent judgment in SEC v Bank of America takes the high road:

The proposed Consent Judgment in this case suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the Bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth.

transparency of results of consultation September 14, 2009

Posted by Bradley in : consultation , comments closed

The EU Commission today published results of consultations on out of court resolution of disputes about financial services and basic bank accounts. The Commission has produced summary documents reflecting the results of the consultation. These documents show that the Commission received 97 responses to the basic bank accounts consultation and 68 responses to the ADR consultation. The basic bank accounts summary document reveals a range of views about the issues among respondents. For example, the document suggests that industry and public authorities have much more faith than consumers and users of financial services and civil society organisations in the effectiveness of voluntary codes of conduct. Not a very surprising result. And although there’s a lot of academic support for self-regulation, the academic organisations and think tanks which responded to this consultation did not tend to think that voluntary codes were effective either.