| News on the capital markets, securities and financial industry |  |
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- FDIC seeks rule changes on securitization
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said the agency is striving to get rules on securitization changed. Tom Deutsch, deputy executive director of the American Securitization Forum, an affiliate of SIFMA, said the FDIC might also propose fees, possibly based on securities' performance, for credit rating companies and underwriters. He also said the agency might seek increased disclosure for investors, more flexibility of securitized debt for servicers and a risk-retention requirement for issuers. Bloomberg
(11/12)
     
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| Industry News |  | |
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- Debate on derivatives, clearinghouses continues
Derivatives have been the focus of regulatory debate lately, but they remain a useful tool, said Nobel economist Myron Scholes. Banning them would be a "Luddite response that takes financial markets back decades," Scholes said. Regulators think trading derivatives through clearinghouses would make them safer, but doing so would hurt banks' profit and make certain corporate hedging prohibitively expensive. The Economist
(11/12)
- Feinberg "cognizant" limiting bankers' pay might cut talent
White House pay czar Kenneth Feinberg said he understands fears that limiting pay at banks that received federal aid could drive away talent. "I'm very cognizant of the concerns expressed by these companies," Feinberg said. But he warned that his first concern has to be the taxpayer. "The law makes it clear that the determinations I render are designed, first and foremost, to make sure those companies thrive and that the taxpayers get their money back," he said. Bloomberg
(11/12)
- Commentary: Regulators look to CoCos to solve issues
Regulators on both sides of the Atlantic Ocean are looking into contingent-convertible bonds, also known as CoCo bonds, and quietly questioning whether they might resolve the problem of financial institutions becoming "too big to fail." Lloyds Banking Group is pioneering the type of bond, and committees linked to the Bank for International Settlements are poised to consider whether to encourage others to follow. Columnist Gillian Tett says she views widespread use of CoCo bonds with "a touch of cynicism." Financial Times (tiered subscription model)
(11/13)
| Regulatory Roundup | | |
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- Schapiro expects SEC to adopt muni-disclosure changes soon
Mary Schapiro, chairman of the Securities and Exchange Commission, said she expects the agency will meet with lawmakers early next year to see about expanding its authority over the municipal bond market. The meeting likely will take place after the SEC adopts changes to its rule on municipal-securities disclosure. "We're coming close to having exhausted the limits of our authority to mandate disclosure through the dealers," she said. "And it will be time for us next year to take a serious look at what more we can do and what we ought to be talking to Congress about doing." The Bond Buyer (free content)
(11/13)
- JPMorgan's Dimon: Banks should be allowed to fail
In a commentary, JPMorgan Chase CEO Jamie Dimon argues that the concept of "too big to fail" is fundamentally wrong. Banks should be allowed to fail, regardless of their size, he writes. But Dimon warns that breaking up large banks would mean a loss of competitiveness. "Scale can create value for shareholders; for consumers, who are beneficiaries of better products, delivered more quickly and at less cost; for the businesses that are our customers; and for the economy as a whole," Dimon writes. The Washington Post
(11/13)
- FDIC to collect banks' insurance premiums in advance
The Federal Deposit Insurance Corp.'s board voted to require banks to pay their insurance premiums for the next three years at the end of this year. The FDIC will collect roughly $45 billion to cover the cost of expected failures. The move suggests that the FDIC expects many more banks to collapse. Sheila Bair, chairwoman of the FDIC, said she is pleased with "the industry's willingness to step up to the task." The Washington Post
(11/13)
| SIFMA News | | |
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SIFMA Municipal Bond Credit Report for Q3 available
SIFMA released its Municipal Bond Credit Report for the third quarter. The report provides market participants and observers research and statistics on various parts of the municipal bond market. The report states that total long-term issuance for the first nine months of this year reached $288.8 billion, less than the $321.5 billion issued in the same period last year. In the short-term market, issuance for the first nine months was $55.1 billion, up from $42 billion in the same period in 2008. Interestingly, $33.5 billion of this year's amount came in the third quarter. Read the complete SIFMA Municipal Bond Credit Report.
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SIFMA Research Quarterly for Q3 is available
SIFMA released its third-quarter 2009 Research Quarterly. The report provides market participants and observers research and statistics on key areas of capital markets. Areas of the markets that are featured in the report include municipal bonds, Treasuries, federal agency debt, funding and money-market instruments, mortgage-related securities, asset-backed securities, collateralized debt obligations, corporate bonds, equity, and leveraged loans. Read the complete SIFMA Research Quarterly.
| Legislative Update | | |
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- SIFMA, others oppose limiting banks' stakes in clearinghouses
SIFMA, the International Swaps and Derivatives Association, the ABA Securities Association and NYSE Euronext urged lawmakers to throw out a proposal that would restrict financial institutions' stakes in derivatives clearinghouses. The groups said banks have the capital and expertise the over-the-counter derivatives market needs. Rep. Stephen Lynch, D-Mass., inserted the measure into legislation aimed at reforming the swaps market. CNNMoney.com/Dow Jones Newswires
(11/12)
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