Today’s post previews a forthcoming article by this author entitled “Credit Rating Agencies and the Protection of the “Public Good” Designation: The Need to Readdress the Understanding of the Big Three’s Output’, to be published in the Business Law Review (the pre-published version can be found here ). The article, which aims to promote another reason for why the credit rating agencies not only survived the Financial Crisis, but increased its profitability, suggests that an underlying sentiment that exists within academia and policymaking corridors fundamentally protects the agencies’ position in an ideological manner. The proposal in the article is that by a. revealing this sentiment, and b. correcting that sentiment, we can begin to build an environment whereby the regulatory, legislative, and judicial focus is aimed more accurately, so that potentially a truly effective deterrent can be established. So, with that in mind, we will examine just some of the key components to the a...

Today’s post reacts to the recent report put forward by the U.S. Department of the Treasury entitled ‘ A Financial System That Creates Economic Opportunities: Banks and Credit Unions ’, which represents the aim of the Trump Administration to ‘ do a big number on Dodd-Frank ’. The headline effect of the report, namely the proposed circumvention of the Consumer Financial Protection Bureau (CFPB) on the basis that ‘ the CFPB’s approach to enforcement and rulemaking has hindered consumer choice and access to credit, limited innovation, and imposed undue compliance burdens ’, will no doubt be the key issue with regards to the fallout of this contentious report. For this post, we will assess the report and the underlying sentiment, and then position this understanding within a wider picture of the ‘amnesia’ that is taking hold despite a number of globalised warnings regarding the ability of the system to withstand any more shocks so close to the last Crisis. The Treasury report is th...

On many occasions here in Financial Regulation Matters we have looked at the troubled bank RBS, whether in relation to its continued malaise since it was bailed out by the British taxpayer, or whether in relation to the potential court cases that were threatened with regard to the Financial Crisis. With all this in mind, it is not hard to see why the recent news that the Bank is to cut 443 jobs and move the respective teams to India instead is causing quite a stir. So, in this post the focus will be on this outsourcing and the subsequent debate, but also whether bailing out a troubled bank should be the foundation to enforcing loyalty to the given country, as a number of people are suggesting in the wake of RBS’s recent declaration. The particulars of the RBS bailout in 2008 will not be repeated here, but the headlines of a £45 billion bailout and combined losses of £58 billion since tell the story clearly enough. It is against this background that the recent news emanating...

At the beginning of the month, we discussed here in Financial Regulation Matters the state-backed rescue of the world’s oldest bank – Monte dei Paschi di Siena (BMPS) – and what it may have meant for the issue of ‘too-big-to-fail’. Over the past weekend, news emerged from Italy that confirmed that the deterioration of BMPS was, as had been predicted , only the start of the troubling financial environment that is enveloping Italy at the moment. With the Italian Government receiving the support from the European Commission to provide financial assistance to two Venetian banks – Banca Popolare di Vicenza and Veneto Banca – the Government duly ‘bailed-out’ the two banks to the tune of €5.2 billion, with additional guarantees of €12 billion being put in place. In this post we shall therefore assess these recent developments, but then it will be important to ask what this means for the role, better yet the belief in financial regulation as an ideal – if the financial elite are consciou...

This short post today looks at the news that the rating oligopoly – the three largest agencies; Standard & Poor’s, Moody’s, and Fitch Ratings – has took aim at the Banking sector in Australia. The noises coming from Australia in response are the same noises we hear again and again when the rating agencies turn their collective focus towards a specific sector or a specific region, namely that the ratings downgrade will ‘ do little to alter [the] costs of funding ’. Yet, there is a much bigger issue, and that is that the cost of borrowing is not the most important aspect, rather the biggest issue is the safety net that the agencies and institutions recognise as being the new norm – taxpayer assistance. In this post, we will look at the current situation in Australia but we will also move back to look at the pattern that keeps emerging: a sector does not perform as ‘experts’ predict that it should, rating agencies collectively smell blood in the water and drop credit ratings, whi...

Here in Financial Regulation Matters and across the U.K., with regards to those concerned with Corporate Governance, the collapse of the large retailer British Home Stores (BHS) has been a cause of great debate, and even greater consternation. The ease with which the company fell, and the sheer arrogance of those who caused it, led to Parliamentary investigations and a number of increasingly damning investigations from Journalists, academics, and commentators. In February, in one of the first posts here in Financial Regulation Matters , we looked at the calls to make private companies abide by the Financial Reporting Council’s Corporate Governance Code (which is aimed at Public Companies only), whilst later we also looked at the calls to enforce the implementation of workers and stakeholders’ interests at Board level, together with the proposed binding-quality of shareholder votes when it came to Executive compensation. If we take a look back into the archives of posts, a growing...

Here in Financial Regulation Matters , we have discussed the Serious Fraud Office (SFO) on a number of occasions. Whilst this author has discussed the viability of the Office within a different regulatory framework, the most recent focus on the Office is arguably the most important issue with regards to the SFO. On the 18 th of May we looked at the Conservative Party’s pledge to dissolve the SFO and merge it into the National Crime Agency, something which was suggested represented the culmination of Theresa May’s incessant quest to quash the SFO stemming from her time as Home Secretary. Whilst the general election result puts the Conservative Party’s pledges up in the air, somewhat, yesterday’s announcement – one which was eagerly awaited – shows that the SFO, and its Director David Green , will not be going down with a whimper… far from it. Yesterday morning, the SFO announced that it has charged Barclays and four individuals associated with the Bank – John Varley (former CEO), ...

Today’s post looks at the issue developing in the corporate world concerning multiple Chairmanships, particularly with regard to leading companies. Following on from investor unrest regarding the positions held by the Chairman of Tesco, which will be discussed in this post, recent investor action against the positions held by Renault-Nissan Chief Carlos Ghosn is keeping this issue in the headlines. So, in order to make sense out of this we will examine the two stories and look at how reasonable it is for one person to hold multiple Chairmanships; with the recent and relative rise of shareholder activism, it is likely that this issue will continue to arise. Before we look at the issues within the French car manufacturer, we need to revisit someone who we have discussed before here in Financial Regulation Matters , and that is the Chairman of Tesco, John Allan. Rather than focus on his comments regarding gender equality, as we have already done, the turn of the year represents a ...

In this post, the focus will be on the recent decision by Moody’s to upgrade RBS’ credit rating, citing their ability to withstand future penalties for financial crisis-era transgressions. With RBS having been covered on a number of occasions here in Financial Regulation Matters , this post will take a different view of the Bank and look at the pending future it has. The question stemming from the recent upgrade is whether it indicates that the settlement with the U.S. Department of Justice (DoJ) will be as the bank expects, which is what Moody’s believe, or whether it will be much more, with the likely result being an incredible blow to the Bank’s attempted recovery. RBS was central in the Financial Crisis, and this is confirmed by the number of penalties and settlements it is facing. There were arguably three remaining hurdles in this sense up until recently (it has already faced and paid a number of fines since the Crisis), with one of those hurdles falling by way of the agr...

This post reacts to the news yesterday that the E.U. is developing plans to house the massive €1.2 trillion ‘clearing’ market wholly within its jurisdiction post-Brexit, putting the City of London’s position as leader in this market in great peril. In this post we will review the obviously formidable response – including citing global systemic risk – but we shall also look at the underlying tone of the E.U.’s attempted move and what, in reality, it means for Britain as it heads, tepidly, into its negotiations with the E.U. over the terms of its secession – it seems the ‘ freedom ’ that was promised can only be achieved at the same time as experiencing remarkable loss and, assuming that “Leave” voters want to continue experiencing the trappings that come with a prosperous nation, everything will pretty much stay the same as before, except for one crucial difference. In terms of the actual substance to yesterday’s news, it is prudent to start off with a basic understanding of wh...

Today’s post looks at the recent news that, according to the Financial Ombudsmen Service in the U.K., complaints over the last year regarding so-called ‘payday loan’ companies have increased by an incredible 227% , whilst complaints relating to consumer credit more broadly have increased by almost 90% to around 26,000. We have looked at this issue before here in Financial Regulation Matters on a number of occasions – most notably with regard to the Financial Exclusion Committee – so today we will assess these increases and the supposed rationale for them. However, as is usually the case when we look closer at any issue, there is a growing underlying issue which is intensifying at every turn. The figures released by the Financial Ombudsman Service relate to most sources of credit, with the majority of complaints still being concerned with Payment Protection Insurance. Whilst some areas for complaint in relation to credit went down – complaints about banks for example – the gene...