Regulation

  • Banks

    Gary Gensler Going Down Swinging

    International regulatory amity, bipartisan concerns and common sense be damned: The (probably) outgoing CFTC chair is going to see to it that these swaps-trading rules go into effect next month, damn the consequences.

    / Jun 21, 2013 at 5:18 PM
  • It's been too long, Googly-Eyed Pile Of Money.

    Banks, News

    Who Would You Rather Trust: Bankers Or Regulators?

    A simple model of banking regulation and, like, counter-regulation goes something like this: Regulators are conservative and dumb, and want to safeguard banks from bad risks even at the cost of preventing good risks, Bankers are aggressive and smart, and want to take lots of good risks even at the cost of taking some bad […]

    / May 7, 2013 at 12:11 PM
  • Tarullo does surprisingly well on Google Images.

    News

    Fed Governor Wants Everyone To Remember That It’s Not Just Banks That Are Too Big To Fail

    One reason that a lot of people are enamored with the Brown-Vitter approach to bank regulation is that it’s very simple, and everyone deep down sort of thinks that the simple answer has to be better than the complicated one. “You don’t need risk-based capital or stress tests or liquidity coverage ratios or VaR models […]

    / May 3, 2013 at 3:23 PM
  • This has nothing to do with anything but y'know it's Art. And I like it.

    News

    Worst Abuses Of Unregulated Art Market Look A Lot Like Typical Day In Financial Industry

    If you like or hate financial regulation you might take a quick look at today’s front-page New York Times article about how the art market is unregulated. Apparently this leads to terrible things like “chandelier bidding,” where auctioneers get the ball rolling by calling out a few fake bids, as well as conflicts of interest […]

    / Jan 28, 2013 at 11:10 AM
  • THESE GUYS

    News

    One Part Of Goldman’s Principal Investing Group Caught Doing Principal Investing

    If you’re a true believer in vulgar Volckerism – “banks shouldn’t be allowed to make bets with their own money” – then you have an inexhaustible source of things to get mad about, since the only thing banks do is make bets with their own money, for some values of “bets” and “own.” Bloomberg’s Max […]

    / Jan 8, 2013 at 4:57 PM
  • more cow

    News

    Turns Out Global Regulators Are Fine WIth Using Credit Ratings To Decide What Banks Can Do

    It’s popular to say that financial markets and regulators have extremely short memories and so let’s say it about these new Basel liquidity coverage ratio rule changes out today. But not in an annoying sneery way. I mean, in an annoying sneery way, but not the obvious one. The story is that among the post-2008 […]

    / Jan 7, 2013 at 4:53 PM
  • Partnoy & Eisinger make a big deal of the stagecoach. This one seems to come from an official WFC web page.

    News

    Turns Out Wells Fargo Doesn’t Just Keep Your Deposits In A Stagecoach Full Of Gold Ingots

    There’s a huge article by Frank Partnoy and Jesse Eisinger in the Atlantic today about how banks are so horribly complicated that even sophisticated investors, meaning basically Bill Ackman, don’t trust them any more. I suppose this provides an excuse for me to trot out a toy theory that’s been congealing in my head, which […]

    / Jan 3, 2013 at 2:03 PM
  • Honestly she has nothing to do with this at all, but she's (1) European and (2) kind of fun to look at.

    News

    On The Bright Side, European Banking Bonuses May Be A Lot More Predictable

    It’s probably good news that “European Union finance ministers reached a landmark deal early Thursday that would bring many of the continent’s banks under a single supervisor,” but of course it wouldn’t be Europe without some self-evidently bad ideas for financial regulation, so today we also get this: Bankers’ bonuses in Europe would be capped […]

    / Dec 13, 2012 at 1:26 PM
  • Wait, this isn't my Intrade account, this is my 401(k).

    News

    Now You Can’t Buy Your Crude Oil Futures In $10 Increments On Intrade

    Like a lot of people I got an email yesterday telling me to close my Intrade account. This will not be a problem for me because: Now I know it looks like I was terrible at predicting the election, but the real explanation is of course that I was astutely predicting the end of Intrade […]

    / Nov 27, 2012 at 11:13 AM
  • Mary Schapiro: probably not working at Goldman Sachs soon, but who knows?

    News

    SEC Lawyers Annoy Their Way Into The Hearts Of Private-Sector Employers

    So let’s say you’re a bank and, redundantly, you are in trouble with the SEC. And you want to hire a new lawyer to get you out of that trouble, because your old lawyers got you into it. You decide, sensibly, to hire a lawyer directly from the SEC, both because those lawyers have valuable […]

    / Aug 6, 2012 at 12:22 PM
  • Banks, News

    Let’s Talk About: Basel III

    The Fed last night unleashed eight zillion pages of Basel III implementation on the universe and I’m tempted to be like “open thread, tell us about your hopes and fears for capital regulation.” So do that! Or don’t because it is super boring, that is also a valid approach. Still I guess we should discuss.

    Starting slow though. Banks have to have capital, meaning that they have to fund some of their assets with things that are long-lived and loss-absorbing, like common equity, rather than with things that have to be paid back soon and at face value. The reason for this is that the rest of banks’ assets are funded with things that we really do want to be paid back soon and at face value, like deposits, and if the value of those assets declines you don’t want those deposits to be wiped out.

    The rules say that you need capital equal to a percentage of your assets. The game is deciding (1) what that percentage is, (2) what is capital (proceeds from selling common stock, and actual earnings, yes, but, like, deferred tax assets?), and (3) how you count assets (you might want more capital to shield you from losses in, say, social media stocks than you would to shield you from losses in Treasury bonds, so regulators use “risk-weighted assets,” so that $1 of corporate bonds counts as $1 of assets, $1 of Treasuries counts as $0 of assets, and $1 of Facebook stock counts as $3 of assets*).

    Anyway, here are the required capital levels:

    / Jun 8, 2012 at 1:17 PM
  • News

    Market Volatility Soon To Be Just A Distant Memory

    So, um, news today, not great, huh? So no surprise that stocks are down. It’s okay though, since the SEC has cooked up a cure: The Securities and Exchange Commission has approved two proposals submitted by the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) that are designed to address extraordinary volatility in […]

    / Jun 1, 2012 at 1:55 PM
  • News

    Reducing High Frequency Trading By Regulating It Less

    Market microstructure is a thing that I don’t really understand and that seems daunting to me so I’ll pass this along as tentatively as possible, but: I thought this piece was really good.* Again, not my area, so if you disagree just get furious at me in the comments, but I thought it might be […]

    / May 24, 2012 at 12:37 PM
  • Banks, News

    Whom Should We Prevent From Blowing Themselves Up, And Why?

    I might have enjoyed this Andrew Ross Sorkin column, about how bringing back Glass-Steagall would have prevented neither the financial crisis nor l’affaire Whaledemort, more than most people.* Yes, the argument is pretty silly – like saying we shouldn’t have speed limits because they probably wouldn’t have prevented the Columbine massacre – but it contains […]

    / May 22, 2012 at 4:16 PM
  • Banks, News

    Europe Will Try To Make Its Banks’ Creditors Play Nicer With Each Other

    Today the EU issued a discussion paper about how it plans to forcibly write down the debts of shaky banks if it ever comes to that, which for some reason is called a “bail-in,” I guess in the sense that the bailing is coming from creditors who are already in the bank’s credit rather than […]

    / Mar 30, 2012 at 6:28 PM
  • Founder and Managing Partner of T2 Partners LLC Whitney Tilson speaks at the Reuters Investment Summit in New York

    Hedge Funds

    Which Hedge Fund Manager’s TV Commercial Are You Most Looking Forward To?

    I take back whatever mildly negative things I may have said about the JOBS Act, since apparently in addition to making it easier for small startups to rip off investors, it will also make it easier for small hedge funds to rip off investors:

    President Barack Obama’s securities-law rollback known as the Jobs Act, expected to be signed into law next month, also contains a provision that would lift the ban on the marketing of private funds, potentially giving hedge funds, private-equity funds and others greater freedom in marketing their offerings to the public, industry attorneys said.

    Currently, private funds are allowed only to market to a small group of investors: those with whom they have pre-existing, “substantive” relationships. Under the bill, hedge funds could start sponsoring sporting events and begin advertising their funds in print, the lawyers said.

    The shift is “significant” and could provide a boost to small hedge funds trying to raise capital but that lack brand-name recognition or wide contacts, says Steve Nadel, a hedge-fund lawyer with Seward & Kissel LLP in New York; larger, more established firms sometimes have investors waiting to invest.

    The Journal goes on to talk about the free speech aspect of this, and I did that too, so yay, now you can tell strangers how awesome your hedge fund is, AND OF COURSE YOU WILL DO JUST THAT, and you probably are already and are surprised to learn that it’s illegal*? Also, and more importantly, soon you will be able to give people money to induce them to tell strangers on the internet how awesome your hedge fund is, so, y’know, consider giving us some of that money, because we like money.

    / Mar 28, 2012 at 6:42 PM
  • News

    Happy Volcker Day!

    I guess this is a thing? Today is the last day to submit comments on the Volcker Rule so hurry!* No less than Paul Volcker himself was roused from 25 years of slumber to submit his own comment, and while he was up he laid a gleeful smackdown on European governments. You may recall that […]

    / Feb 13, 2012 at 4:07 PM
  • News

    Jamie Dimon Will Not Have His Employees’ Balls Examined Every Time They Want To Make A Trade, No Matter How Bad Paul Volcker Wants It

    I understand the goal to make sure these companies don’t take huge bets with their balance sheets. But market making? Just like these stores down the street, when they buy a lot of polka dot dresses, they hope they’re going to sell, they’re making a judgement call. They may be wrong! So protecting the system […]

    / Feb 13, 2012 at 4:02 PM

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