{"id":21049,"date":"2013-02-06T22:46:55","date_gmt":"2013-02-07T02:46:55","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=21049"},"modified":"2013-02-06T22:46:55","modified_gmt":"2013-02-07T02:46:55","slug":"february-6-2013","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=21049","title":{"rendered":"February 6, 2013"},"content":{"rendered":"

Bloomberg has an the regulatory realities of ratings<\/a>:<\/p>\n

The U.S. lawsuit against Standard & Poor\u2019s raises pressure to accelerate competition in the ratings industry while the government itself has adopted rules that left the business dominated by the same companies whose flawed grades sparked the worst financial crisis since the Great Depression.
…<\/b>
Ann Rutledge, a structured finance specialist, has watched her application to become an NRSRO languish at the SEC for 20 months. Her company, R&R Consulting, has yet to be granted a license because some of the eight client letters don\u2019t meet the requirements of a credit rating as defined by the 2006 law. The statute specifies that only written testimonials that are notarized from institutional buyers attesting to its ratings may be used. R&R\u2019s clients include pension funds, hedge funds and governments.<\/p>\n

Rapid Ratings International Inc., a New York-based firm that uses quantitative models to grade securities, hasn\u2019t applied for the NRSRO designation, which would allow investors to buy securities rated by the company to meet regulatory requirements, because its costs would increase by 40 percent to hire compliance staff, James Gellert, chief executive officer, said in a Jan. 7 telephone interview.
…<\/b>
Meredith Whitney Advisory Group LLC, headed by the former Citigroup Inc. analyst, made a presentation to the SEC in November 2010 seeking NRSRO status and has yet to be approved, according to the SEC website. A woman who answered the phone in the company\u2019s New York office Feb. 4 declined to comment on its application.<\/p>\n

Costs have also kept PF2 Securities Evaluations Inc., a New York company that values structured products, from applying for the designation, according to Gene Phillips, a director.<\/p><\/blockquote>\n

Danish banks are having regulatory problems<\/a>:<\/p>\n

The Basel Committee on Banking Supervision, which brings together regulators from 27 nations including the U.S and China, last month expanded the range of easily sold assets banks must have on hand to weather a month of market turmoil. While policy makers approved company debt and equities, they kept limits on covered bonds, mortgage-backed securities that fund almost all Danish home purchases, and are rated higher than the sovereign debt of Japan, Italy and Spain.<\/p>\n

Denmark, which doesn\u2019t have a representative on the committee, has more of the securities outstanding per capita than any other nation, with its banks holding more than half of the 3.3 trillion-krone ($600 billion) market. Unless revised, lenders will have to find alternatives to fulfill the liquidity requirements at the same time Denmark is shrinking its issuance of government debt. Interest rates for Danish homeowners, the world\u2019s most indebted, may also climb, creating reverberations throughout the economy, said Steen Bocian, chief economist for Danske Bank A\/S, the country\u2019s largest lender.
…<\/b>
Household debt is about three times disposable income, and most of it is in mortgages financed by covered bonds, a form of bank financing backed by mortgages, creating Europe\u2019s second- largest residential covered bond market after Spain. Danish banks held mortgage bonds valued at 1.52 trillion kroner, or 46 percent of the 3.3 trillion kroner outstanding, in December, the central bank said Jan. 25.
…<\/b>
Basel has categorized government debt as level 1, allowing banks to fulfill 100 percent of their liquidity requirements with the assets. Mortgage-based debt is considered level 2, so there are caps on their use as liquid assets. Covered bonds will have a 40 percent ceiling, while securitizations can\u2019t count for more than 15 percent of a lender\u2019s liquidity buffer.<\/p><\/blockquote>\n

A major objective of Basel III is to force banks to own European government debt, since otherwise it might not get sold.<\/p>\n

There’s another smoking gun in the LIBOR rigging scandal<\/a>:<\/p>\n

A Royal Bank of Scotland Group Plc trader colluded with a counterpart at UBS AG to pay almost 211,000 pounds ($330,000) in bribes to brokers willing to help them manipulate global interest rates, regulators said.<\/p>\n

Neil Danziger, a London-based derivatives specialist at RBS, helped Tom Hayes, the former UBS employee at the center of the global investigation into rate-rigging, to bribe at least two brokers into persuading other banks to submit rates in line with their own, according to transcripts released by regulators that didn\u2019t identify the traders by name. Two people with direct knowledge of the talks confirmed the traders\u2019 identities. The regulators didn\u2019t identify the brokers involved.
…<\/b>
\u201cCan you do me a favor,\u201d an unidentified broker asked Danziger on Sept. 19, 2008, according to a transcript of the conversation released yesterday by the U.S. Commodity Futures Trading Commission<\/a>. \u201cYou\u2019re not going to get paid any bro for this and we\u2019ll send you lunch around for the whole desk.\u201d As the broker outlined the trade, he said \u201cTake it from UBS, give it back to UBS. He wants to pay some bro,\u201d referring to fees.<\/p>\n

\u201cYeah, yeah,\u201d Danziger replied.<\/p>\n

Later that day, the broker asked Danziger if he could \u201cdo another 100 yards\u201d or 100 billion, increasing the size of the transaction. \u201cFlat switch,\u201d the broker said. \u201cI know I\u2019m pushing my luck.\u201d<\/p>\n

RBS then entered into a wash trade with UBS that enabled the Zurich-based lender to pay about $31,000 in fees to the broker for its help in rigging Libor, the CFTC said.<\/p><\/blockquote>\n

Cash Store Financial Services is fighting to retain its payday loan business<\/a>:<\/p>\n

Cash Store Financial Services Inc. says it will request a hearing before Ontario\u2019s Licence Appeal Tribunal in response to government pressure on its lending businesses.<\/p>\n

The company says Ontario\u2019s registrar for payday loans wants to revoke the payday lending licences of its Cash Store Inc. and Instaloans Inc. businesses.
…<\/b>
Cash Store Financial says Ontario\u2019s Ministry of Consumer Affairs has attempted since September, 2011, to force it to deliver payday loans in cash, rather than the electronic methods they now use.<\/p>\n

The company says it\u2019s unwilling to place employees and customers at risk by having them handling cash.<\/p><\/blockquote>\n

I cannot for the life of me determine why the Ministry wants to force them to use cash – what business is it of the Ministry? Naturally enough, I can’t find anything on the web to answer this question, as the media does nothing but re-write press releases.<\/p>\n

This is just another example of creeping regulation. They don’t want to pass a law forbidding X, because that would expose the politicians for what they are. Instead, they install a licensing requirement and simply refuse to issue a license to those deemed unworthy. It’s pretty sleazy.<\/p>\n

Anyway, it resulted in a downgrade by S&P<\/a>:<\/p>\n

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