Libor - Regulators asleep on the Watch (again)?

While I have doubts that the alleged or actual manipulations of the Libor rate-setting process really did major harm to anybody it is amazing that one large market participant was allowed to play a crucial role in the fix. Another case of regulators asleep on the watch?

Salz Report on Barclays - another Figleaf for the Establishment

The lengthy - and ridiculously expensive - Salz Report has to be seen in the long English tradition of conducting expensive and lengthy enquiries when the solution to the problem would just have taken common sense and a willingness for decisive action. Both ingredients are missing. It is not clear why there would have to be an enquiry into Barclays Bank and not into any of the other major banks, investment institutions, regulators and politicians who must certainly share a large part of the blame for problems in the financial sector - and wider economy - that have evolved during the past few years. The proverbial blind man could see that executive pay in banks - but also in investment firms and major listed companies - has spiralled out of control. It leaves a sour - not to say salty - taste in one's mouth when one sees that the costs of the report are such that the 'solution' is part of the (pay) problem. How can anyone justify that a 244 page report that any junior management consultant with his head screwed on could has put together can cost £17 million! And how much of that did go to the City 'Grandee'?

No regulators slated for failure

But HBOS chiefs 'slated' for failure (Financial Times). And anyone thought that there was a proper investigation of banking problems?

Goldman Sachs Liberty Harbor - too close for comfort?

Another Cyprus Bank Robbery?

When the state loots the shareholder

State-sanctioned looting of shareholders becomes the norm in the United Kingdom. First not-so-gentle persuasion was used to force banks to compensate 'victims of mis-selling' (though how these millions were forced to buy products that they were not supposed to either want or need still is beyond me). Then all those who were at the loosing end of derivative contracts that were designed to protect them against interest rate risk were out with their begging bowls and a complicit media commentariat, lobbyists and politicians jumped on the bandwagon to punish the unloved banking sector. The latest illustration of madcap regulatory overreach is given today as the UK's FSA fines Prudential Plc 30 (in words: thirty!!!) million pounds on the spurious pretext of not having been informed in time about a possible bid for AIA. The shareholders and pensioners who are paying for this nonsense will be the ones picking up the bill that feeds the ever-rising army of paper-pushers in the regulatory Gulag that slowly strangles the financial industry in the UK - no need for the 'Troika' to aid an inept government of PR luvies.

Stalinist Incomes policy - spiteful and arbitrary

The European (Dis?) Union is on the slippery road to serfdom (Hayek) when professional agitators like Sven Giegold (read his CV carefully, you will shudder when you read it!) are given the opportunity to introduce 'laws' that arbitrarily set pay (Financial Times) for a minority of the population that he and his minions want to punish for ideological reasons. It is not possible to argue with these extremists (have a look at what 'Attac' stands for) and the only way to combat the takeover of the pseud-democratic institutions in the EU and the member states is a complete overhaul of the political system based on a radical and comprehensive form of direct democracy safeguarded by a proper bill of rights that bans discriminatory legislation. Those who do not just want to shrug their shoulders or clench their fists in their trouser pockets should contact me and take part in the democratic reform project.

UBS: Will Junk Pay motivate the troops?

I doubt it. When regulators don't regulate properly and management runs the ship aground it is not obvious why 6,500 staff should pay the penalty. Top management may be able to be paid in monopoly money as it has (hopefully) made it's pile and could happily retire even if the bonds that are being paid turn out to be worthless. But any aspiring young - or even middle-ranking - banker needs hard cash to pay to the ever-rising cost of housing, education etc. And is there ever going to be a penalty for regulators or politicians that don't do their job properly. The ECB has just announced that it will hire another 2,000 (useless) bank 'supervisors' in the near future....wish we had another Kafka to weave a novel with this subject matter.

Deutsche Bank - Vorwaerts mit Achleitner?

The write-offs published in DB's results show that despite all the market-leading positions the Bank may have in certain business segments the size of the company makes it inevitable that some major air pockets are hit in various parts of the far-flung empire. This is a problem that all banking behemoths face. Add the incentives to make more profits every quarter (and a corresponding bonus) and you have nearly guaranteed that some transactions will lead to losses. So it is problematic when an institution such as Deutsche Bank finds it necessary to put Paul Achleitner into the role of chairman of the supervisory board after he has managed to display less than excellent flair for managing the finances and investments of Allianz AG. Do I need to mention Dresdner Bank to anyone?

Derivative Trading - prone to abuse, fraud

As little - or even no - cash changes hands when transactions in derivatives (especially those conducted " Over-the-Counter") are executed they require even more oversight than transactions in securities that are cash-settled within a very short time span. Malpractice can easily be hidden from compliance and audit departments - even if these are not complicit in any misconduct or fraud. Often staff in these units are of lower status, less well paid and less well versed in the intricacies of the instruments involved. OTC derivatives are by nature traded by appointment and the correct pricing is not easy to verify - even with the best intentions of any supervisors. So it is quite easy to build in a margin for those that want to skim some money off the transactions they conduct. That the dealing community fights every proposal to bring all transactions online and onto exchanges raises doubts about the sincerity of their motives in doing so. Reports about the conditions in the dealing department of Monte dei Paschi di Siena illustrate these problems poignantly. (Reuters)