We have analysed the issue of domestic credit rating provision within China on a number of occasions here in Financial Regulation Matters . Today one of my articles was published in The Journal of Business Law (available here , and here in a pre-published version) that analyses the trajectory of rating provision within the country. We have also looked at the situation from the view of the political and geo-political ambitions of China here , and from the viewpoint of the leading US-based rating agencies here . In today’s post, we will look at evidence that demonstrates the problem at hand, and why China has now become so open to having the US-based rating agencies operating within its territory, on their own, for the first time.   It has been reported this morning that domestic Chinese rating agencies are providing for massive upgrades in their ratings for ‘local government financing vehicles’ (LGFV), despite the impacts of the Covid-10 pandemic still playing out. The article...

Today’s post will be concerned with Moody’s. We will look at a recent article in the Financial Times , and the surprising response to it from the President of Moody’s Investors Service, the rating arm of the Credit Rating Agency. What is surprising is that Michael West responded at all, because a. the rating agencies do not usually respond to such broad criticism, and b. there was really no need to. However, we shall see that there may well have been a need to, as recent geopolitical developments may prove to be a massive victory for the agency and it may be vital that the agency seeks to reassure the marketplace about its ability to be of use, and as impartial as possible.  The original article in the Financial Times , an opinion piece by Patrick Jenkins entitled ‘ Credit Ratings, like dodgy boilers, can still blow up the house ’, offers very little other than the usual criticism of the credit rating model of the modern era. For example, Jenkins says that ‘whenever there is...

In the first of two short posts today, we will look at the case of the billionaire Sackler Family and their remarkable effect upon American society. The family, who own Purdue Pharma amongst a list of other ventures, have this week seen a massive legal action taken against them by the State of New York who argue that the company is ‘ responsible for the opioid epidemic ’ sweeping through the United States. The attorney-general for New York has called the lawsuit the ‘ nation’s most extensive ’ with respect to the pharmaceutical industry and comes right on the heels of a $270 million suit that was settled in the State of Oklahoma on exactly the same grounds. Whilst the company and the billionaire family who own it did not admit guilt (settling parties rarely do, hence why they settle outside of court) it has potentially opened the trapdoors for litigation. It comes as no surprise then that the company is reportedly considering bankruptcy proceedings in the face of such an onsl...

As 2019 begins and we look back on 2018, it has been, as always, a busy year for the world of business and the regulators tasked with controlling it. In this review post, we will look back over the year by sector, and discuss some of the flashpoints to analyse whether there are any themes that can help us foresee what 2019 has in store. Before that, I would like to thank everybody for their continued support of the blog, and also all of those kind contributors who have provided guest posts throughout the year. Also, in a bit of shameless promotion, my first two books are now available for purchase and I would like to thank everybody at Routledge for bringing Regulation and the Credit Rating Agencies: Restraining Ancillary Services to life, as well as everybody at Palgrave Macmillan for bringing The Role of Credit Rating Agencies in Responsible Finance to life. A Year of Failure There were a number of high-profile failures this year, and many were socially impactful. In 201...

Today’s post reacts to the news that PricewaterhouseCoopers (PwC) has been fined a record amount by a US Court in Alabama over its role in the collapse of Colonial Bank. The reaction to the news, and what it may mean for other regulators (who are currently in the limelight for their soft-touch approach) will be discussed in this post, with the sentiment being that this action is just a step in the right direction, but nothing more (for a number of reasons). Colonial Bank collapsed in 2009 , after buying over $1 billion’s worth of fraudulent mortgages from Taylor, Bean & Whitaker, the former Mortgage-originator which also collapsed in 2009 and saw a number of its executives jailed for fraud . The collapse of Colonial, which is one of the largest in the state of Alabama , has been the subject of a number of trials and investigations, with the most recent concerning the performance of auditors who were tasked with assessing the workings of the bank. Yet, in the overarching sto...

In this brief post, the focus will be on updating the stories we have covered in the past here in Financial Regulation Matters regarding Wells Fargo and their performance over the past decade or so. The last time we covered the scandal that has blighted Wells Fargo’s progression was in May of last year, and since then there have been a number of developments. However, very recently, the bank has received a number of fines which demonstrate the failures that have left the bank struggling to regain the trust it needs to move forward. We last looked at Wells Fargo this time last year, and in that post we looked at the actions of a bank who fraudulently created between 2 and 3.5 million fake bank accounts for the purposes of selling services to customers who often were not aware of the actions taken on their behalf. We covered the details of the fraud in those previous posts, so today it is worth looking at the legal reaction to that fraud. We begin at the end of last month when t...

Today’s post takes a look at the forthcoming trip of Britain’s International Trade Secretary, Liam Fox, to the United States to begin talks about a possible trade deal between the two countries. In the media on both sides of the Atlantic, but particularly in the U.K., there is a real concern about the effects that such a trade deal could generate, with an imbalance between British and American corporations being top of that agenda. So, in this post, we will assess these claims and examine whether a trade deal is being pursued for the right reasons, or whether the pre-Brexit environment is already becoming illustrative of life outside of the European Union for the British. Speaking in July, President Trump said he expects a ‘powerful’ trade deal to be conducted with the U.K. ‘ very quickly ’, and it is on the back of these statements that Liam Fox has travelled to Washington, D.C. The talks themselves, which the head of the TUC – Frances O’Grady - suggests is a ‘ PR stunt ’ for F...