The Senate financial-reform bill: Maul street

May 13th 2010 | WASHINGTON, DC
From The Economist print edition

Bit by bit, things worsen for the financial industry

Lincoln smiles, banks blanch

[Greg Ip] THE American Senate is supposed to bathe radical proposals in a breeze of moderation and reason. The opposite seems to be happening with the financial-reform bill. As it makes its way through the legislative process the bill has become progressively more hostile to Wall Street. Among the hundreds of amendments being proposed on the Senate floor are an even stricter ban on proprietary trading than originally envisaged, caps on debit- and credit-card “interchange” fees, higher deposit-insurance fees for big banks, and (potentially most serious of all) the imposition of fiduciary duties on marketmakers.

Gary Gensler, derivatives cop: A new sheriff

Sep 3rd 2009 | WASHINGTON, DC
From The Economist print edition

Long marginalised, the CFTC reasserts itself under a new chairman

Bloomberg

This OTC derivatives market ain’t big enough for the both of us

 

[Greg Ip] WHEN Gary Gensler was named late last year to head the Commodity Futures Trading Commission (CFTC), the financial industry may have thought him an ally. After all, he had been a partner at Goldman Sachs and later served under Bill Clinton’s famously deregulatory Treasury secretary, Larry Summers. But a book that Mr Gensler coauthored in 2004 might have been a better guide to his predispositions. The cover of The Great Mutual Fund Trap shows a faceless banker playing a shell game. Inside, Mr Gensler warns investors that Wall Street is continuously trying to rip them off.

Barack Obama’s financial appointees have all tended to be pro-regulation, but few are as enthusiastic as Mr Gensler.

Sovereign credit-default swaps: Muffled signals

The original article is linked here.

Sovereign credit-default swaps

Muffled signals

Jun 11th 2009 | WASHINGTON, DC
From The Economist print edition

Credit derivatives on countries are behaving oddly

GOVERNMENTS in the rich world are announcing record-breaking deficits and their credit ratings are under threat. Yet the market that should be most worried is not. An index of credit-default-swap (CDS) spreads on the seven biggest rich economies maintained by Credit Derivatives Research (CDR), a research outfit, has widened in recent weeks, but still signals half the risk it did in February, before the full scale of the damage to public finances became clear (see chart). The trend holds true even for Britain, which is threatened with a credit-rating downgrade, and Ireland, which on June 8th suffered its second sovereign downgrade in three months.

Dave Klein at CDR admits to being puzzled by the trend.