Quite often here in Financial Regulation Matters , we have looked at the experience being faced by British retailers against the onslaught of online commerce but, of course, the experience is shared with American ‘bricks-and-mortar’ retailers. In this short post we will review the fortunes of one of America’s most iconic department stores – Macy’s. Macy’s, founded in 1951 by Rowland Hussey Macy, is one of the most iconic American department stores . To provide some context for the marketplace, Bloomingdale’s is another iconic store but it operates under the Macy’s Inc. holding company, which used to be known as the ‘Federated Department Stores’ holding company before it purchased Macy’s in 1994 and re-branded. Macy’s Inc., in the last full financial year, recorded revenues of nearly $25 billion. However, earlier this month the company announced a set of plans to revive what are quickly becoming ailing fortunes. As part of what the company has labelled ‘ Operation Polaris ’, th...

President Trump’s time in office is undoubtedly one of the more unique periods in American political history, and recently he has turned his attention to righting what he sees as wrongs within the financial sector. That attention, in the past few days, has been directed to providing clemency for convicted criminals – often referred to as ‘white collar criminals’. There are few of particular note and, probably chief amongst them all, is the so-called ‘Junk Bond King’ of the 1980s Michael Milken, the former head of the high-yield department at Drexel Burnham Lambert. In this post we will get to know these figures a little more and look at President Trump’s almost-revisionist agenda. Michael Milken’s story is truly fascinating and there are a number of accounts of this story in the literature. One such book is The Predator’s Ball that attempts to provide an account of the incredible world oh high-yield high-risk finance that took hold in the late 1980s. The ‘Predator’s Ball’ was ...

In May 2017 we looked at the proposed merger between Kraft-Heinz and Unilever, where we discussed the differing approaches to business taken by the two entities. Then, in May 2019, we looked at Kraft-Heinz again as it was under investigation by the SEC because of its accounting situation. More recently however, the company has continued to struggle and now it is the turn of the credit rating agencies to weigh-in and affect the situation for the struggling firm. It was reported last week that, on the basis of Kraft-Heinz’s decision to maintain its dividend payouts to its shareholders despite an ever-growing debt burden, both S&P and Fitch would be downgrading the company to junk status i.e. non-investment grade. S&P cited the ‘unwillingness’ to change course on the dividend decision as a key factor in the downgrade decision, although the company has countered by declaring that ‘we believe it’s important to shareholders to maintain our dividend during this time of tra...

In today’s post we will look at recent calls for more action in the field of credit rating reform, and also some solutions that have been advanced by commentators from the field – our friends at the Expect[ed] Loss blog in particular. Recent calls from the Senate have reignited the discussion and debate regarding credit rating reform, but there are potentially much more deep-rooted questions that need to be asked. As reported last week by Cezary Podkul of The Wall Street Journal , a number of Congressmen have taken the option of pressing the SEC on why more has not been done regarding the inherent conflicts of interests that plague the credit rating marketplace . This is not the first time that this request has been made of the SEC, with a number of academics and former practitioners urging the SEC in November 2019 to ‘ finally end the industry’s “issuer pays” business model ’. The panel, however, did not promote an alternative model, and industry-insiders have been staunch def...

Today’s short post responds to comments made in today’s business press from the Chief Executive of the Competition and Markets Authority (CMA) in the UK, Andrea Coscelli. The sentiment behind Dr Coscelli’s vision of the post-Brexit world for the regulator is that it will be free to pursue certain regulatory actions that it was not entirely free to pursue before, and that now it fully intends on doing so. This may be fair enough, but are there more forces potentially affecting the regulatory scope of British regulators that he is potentially underestimating? Dr Coscelli’s comments in today’s edition of The Financial Times relates to the CMA’s potential regulatory stance towards the big US tech giants once the UK formally moves away from European regulations at the end of the year (once the transitionary period has concluded). Coscelli stated that ‘ the upside [of the UK leaving the EU] is that you take back control – genuinely – of the decisions ’. This sentiment has been conne...