This is a great summary of the Financial Reform Bill implementation, but not a quick skimmer. Many of the provisions have extended timelines and are dependent upon future decisions by a number of regulators, but this is the most comprehensive synopsis of FinReg we have seen from Davis Polk & Wardwell Read more…
The Bank for International Settlements (BIS) annual report includes highly topical economic analysis, including Section III, which discusses the potential ramifications of extended periods of low interest rate policies. In particular, the report notes that the resulting ‘search for yield’ can result in distorted financial innovation, lack of real investment, and Read more…
The House and Senate Banking Committee wrangling wrapped up early this morning after a 20-hour session, with full Congressional approval likely in the next week or two. Commercial end users of interest rate and foreign exchange derivatives look to be largely unaffected by the bill, although some desks may be Read more…
Three-month LIBOR rates head above 50 bps for the first time since last summer. European debt fears seem to be the culprit, as opposed to the likelihood of a monetary policy shift. When the trust among banks and sovereigns returns, LIBOR tends to track the Fed Fund target rate. (Bloomberg)
The full letter to the Senate Banking Committee (WSJ), where the Fed Chairman touches on the reasons for not spinning off swap books from banks, echoing sentiments from Sheila Bair at the FDIC. Major downfalls of a spin-off: reduced regulation, reduced liquidity available in stressful times, and reduced competition with Read more…