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Where there’s a bank there’s a will and a way plus other news and views for Thursday 3 July

July 3rd, 2014
  • Another Failure to Regulate Derivatives – “By the time the Securities and Exchange Commission finalized a rule last month to regulate derivatives under the Dodd-Frank financial reform law, the big banks that dominate the multitrillion-dollar market had already figured out how to game it. This is not a tale, however, of how wily banks always find a way around the rules. In this case, the S.E.C. has written and passed a rule that is custom built for evasion, all the while insisting, unconvincingly, that it does not have the legal authority to be any tougher.”
  • An opportunity missed rather than a case settled – “The authorities have reaffirmed that banks such as BNP are too big to jail. …  If no one goes to jail and the fine does no permanent damage, the settlement becomes more a transaction tax than a deterrent. It is unlikely to be seen as justice in the eyes of the public – people who tend to go to prison when they break the law.”
  • In banking capital punishment works better than torture – “Who can be held accountable when banks misbehave? Not the people who run them. That seems to be the conclusion reached by prosecutors and regulators who, facing a tide of public anger over financial malfeasance, have resorted to putting in the dock not people but corporate defendants: the banks themselves. … Instead of torturing banks financially we should impose capital punishment. A bank that suffers a large loss or a severe compliance failure clearly has not learnt to control risk, and needs a bigger safety cushion. It should be required to hold more loss-absorbing capital. This would punish managers by making it harder to turn a profit.”

3-07-2014 shark

(From Wikipedia)

  • The shark is dead but the price has a bite – Something about contemporary art echoes pyramid schemes … Not long ago I asked Brett Gorvy, head of contemporary art at auction house Christie’s, to estimate the current value of Damien Hirst’s shark – the beast that floats in a tank of formaldehyde … It sold for $8m in 2004. In excess of $70m, Mr Gorvy responded. After all, he said, “Jeff Koons’s ‘Balloon Dog’ sold for $58m last November; is not Hirst’s shark far more celebrated round the world?”

3-07-2014 balloondog

(From Wikipedia)

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