In the latest example of a former financial regulator finding employment in the industry, the Futures Industry Association (FIA) has announced that its new president will be a former leader at the Commodity Futures Trading Commission (CFTC).
Walter Lukken was nominated to the commission by former President George W. Bush and chaired the agency's global markets advisory committee while there. From 2007-2008, when the financial crisis was at its height, he served as its acting chairman. Lukken resigned when President Obama took office in 2009.
In his current role as chief executive officer for New York Portfolio Clearing, he ...
Continue readingMeetings missing from CFTC website
A week before Commodity Futures Trading Commission (CFTC) commissioners unanimously approved new rules restricting how brokerage firms may invest customer funds, executives from Newedge, which had pushed against the rules along with the now bankrupt firm MF Global, attended several meetings with high ranking CFTC officials.
However, not all of these meetings were disclosed on the agency's official logs that track meetings of CFTC officials with outsiders on implementation of the Dodd-Frank financial law.
On November 28, the CEO and high level executives from Newedge, a global brokerage firm, attended two meetings at the CFTC, according to meeting log ...
Continue readingCentral banks ease terms on currency swaps
Stocks surged today as the announcement settled in that six central banks are joining forces to ease terms of currency liquidity swaps. As we have reported earlier here and here, the European Central Bank has recently been increasing its borrowing under the emergency swap facility, which is similar to that set up during the 2008 financial crisis, when lending at one point peaked at $586 billion.
While the Federal Reserve reports the totals that flow through this facility weekly here, it does not provide information on which banks in turn receive loans from other central banks. The European Central Bank ...
Continue readingMoody’s has most employees leaving through revolving door
Moody's credit rating service -- one of the major credit rating agencies that was cited as a contributor to the 2008 financial meltdown -- has more employees go through the revolving door to work at companies they used to rate than any other credit rating agency, according to new Securities and Exchange Commission (SEC) filings required under the Dodd-Frank financial law.
Eighty-two Moody's employees have moved on to jobs at big banks such as Credit Suisse, Morgan Stanley, and Bank of America over the past five years, according to the filings, which are available here. This is nearly four times ...
Continue readingMF Global pushed regulators to use client funds
Late last year MF Global—the failed investment firm headed by Democratic heavyweight Jon S. Corzine that can't account for as much as $900 million of its clients' money--urged a federal agency to allow futures firms to invest funds from their customer segregated accounts in foreign sovereign debt.
In a December 2010 comment letter to the Commodities Future Trading Commission (CFTC), MF Global, along with another firm, Newedge, argued that the agency’s proposal to disallow such investments “is unnecessary, and will eliminate a liquid, secure, profitable and necessary category of investment....no foreign country that actually defaulted on ...
Continue readingFederal Reserve delays release of transcripts of major meetings
If you want to know who says what at next week's meeting of the Federal Reserve’s Federal Open Market Committee (FOMC), which oversees market operations for the central bank, you will have to wait until the year 2016 to find out.
While the FOMC releases the minutes of these meetings three weeks after the fact, full transcripts are kept secret for five years. Right now the most recent transcript available is for December 13, 2005. And even these transcripts have been edited from the original.
As a result, the public still does not know the details of what ...
Continue readingBank executives plead case to administration officials over Volcker rule
Top executives with major banks met regularly with federal agency officials who were writing a draft rule meant to curtail risky Wall Street trading — known popularly as the Volcker rule, named for the former chairman of the Federal Reserve, Paul Volcker — federal agency meeting records show.
Treasury Secretary Timothy Geithner and CFTC Chairman Gary Gensler were among the agency leaders who met with CEOs from companies including Bank of America, Morgan Stanley and JP Morgan Chase since June 2010. Big banks are strongly critical of a provision in the Dodd-Frank financial law that calls for restricting banks from trading for ...
Continue readingGAO says Federal Reserve should improve transparency
In the wake of the financial crisis, when members of Congress and others raised questions about conflicts of interest within the Federal Reserve banking system and individual banks, the Federal Reserve should take concrete steps to become more transparent, reports the General Accountability Office (GAO) in a report issued today.
"[W]ithout more complete documentation of the directors’ roles and responsibilities with regard to the supervision and regulation functions, as well as increased public disclosure on governance practices to enhance accountability and transparency, questions about Reserve Bank governance will remain," reads the report.
Today's report is the second part ...
Continue readingWith Fed foreign currency swaps on the rise, mystery remains which foreign banks benefit
Since the end of August, the European Central Bank has been drawing on the foreign currency swap line established by the U.S. Federal Reserve Board, recently securing $1.8 billion to lend to European banks, most of it over a three-month time period. But the ECB does not name which banks or institutions are receiving these dollars. Who gets the money is anybody's guess.
In the response of worsening economic conditions in Europe, in late June the Fed announced that it was extending authority for such swap arrangements with the European Central Bank (ECB) and three other foreign ...
Continue readingFederal Reserve forced to report which banks benefit from loan programs
It took an act of Congress and a major lawsuit, but the details of the U.S. Federal Reserve Board's emergency loan programs and discount window lending--which peaked at more than a trillion dollars for the nation's biggest banks and other institutions during the recent financial meltdown--finally came into the light.
Created in 1913, the central bank has always kept details of its activities as the “lender of last resort” closely held. The rationale has been that releasing information about which banks and institutions seek temporary assistance from the Fed could cause runs on banks and panic in ...
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