January 27, 2011: The Financial-Crisis Commission Fails To Solve The Whodunit [NEWSLETTER]

Conversation Starter

Report of the Financial Crisis Inquiry Commission
The Financial Crisis Inquiry Commission has concluded that the financial crisis was avoidable. It found widespread failures in financial regulation; dramatic breakdowns in corporate governance; excessive borrowing and risk-taking by households and Wall Street; policy makers who were ill prepared for the crisis; and systemic breaches in accountability and ethics at all levels.

See the full report here.
**CN: The most interesting take on all of this is probably the piece below from The Economist.


Stories related to this topic:

America's financial-crisis commission: The financial-crisis commission fails to solve the whodunit
The Economist
IT IS not the most promising script for a whodunit. Ten experts are brought together to solve a mystery, but they can’t get along and ultimately reach three different conclusions. That, sadly, is the story of America’s Financial Crisis Inquiry Commission, whose book-length report was released on January 27th.
http://jlne.ws/e7dbBO

Split US crisis panel blames Greenspan, Wall St
By Dave Clarke and Kevin Drawbaugh, Reuters
A deeply divided U.S. investigative panel issued a scathing critique of the culture of deregulation championed by Former Federal Reserve Chairman Alan Greenspan, saying the government had ample power to avert the financial crisis of 2007-2009 and chose not to use it.
http://jlne.ws/gzfs4b

Crisis Panel Report Pins Blame on Wall Street, Washington
By Robert Schmidt and Phil Mattingly, Bloomberg
The congressionally appointed panel assigned to probe the origins of the 2008 credit crisis heaped blame on “reckless” Wall Street firms and “weak” federal regulators, concluding the meltdown could have been avoided.
http://jlne.ws/fJg3io

Moody's Modeled 4% Annual Rise in Home Prices for Bond Ratings
By Matthew Leising, Bloomberg
Moody's Corp. assumed U.S. home prices would rise 4 percent annually when it developed a model in 2003 to rate mortgage-backed securities, according to the Financial Crisis Inquiry Commission.
http://jlne.ws/hnctPK

Fed Faulted for Lax Mortgage Regulation Before Financial Crisis
Bloomberg
The Federal Reserve failed to forestall the housing bubble or prevent the abusive lending practices that contributed to it, the Financial Crisis Inquiry Commission said in a report, embracing a lesson that legislators have already tried to correct with new laws.
http://jlne.ws/fO9QLa

Goldman Sachs Got Billions From AIG For Its Own Account, Crisis Panel Finds
The Huffington Post
Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the final report of an investigative panel appointed by Congress.
http://jlne.ws/fzMhsI

Financial Meltdown Was ‘Avoidable,’ Inquiry Concludes
By SEWELL CHAN, The New York Times
The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a Congressional inquiry.
http://jlne.ws/esD8T7


Lead Stories

Strengthening Fiscal Credibility: Fiscal Monitor Update -- January 2011 -- IMF
Despite the improving global outlook, the pace of fiscal consolidation this year is slowing in some key countries. The United States and Japan are adopting new stimulus measures and delaying consolidation relative to the pace envisaged in the November 2010 Fiscal Monitor.
http://jlne.ws/f7oNa0

The FOMC is Right to Stay the Course on QE2 | Jeff Frankels Weblog | Views on the Economy and the World
The Fed has come in for a surprising amount of criticism since its decision in the fall of 2010 to launch a new round of monetary easing — Quantitative Easing 2. Ben Bernanke and his colleagues are right not to give in to these attacks.
http://jlne.ws/h1mpcr

Derivatives Rules Need to Be Simpler, Cheaper, Republicans Say
BusinessWeek
The U.S. Commodity Futures Trading Commission should voluntarily follow President Barack Obama's effort to streamline regulations as it sets new rules on the $583 trillion swaps market, two top House Republicans said.
http://jlne.ws/gEdREO

Frank says cuts would hamper oversight
Boston Globe
Representative Barney Frank lashed out yesterday at Republican efforts to cut federal spending to 2008 levels, saying the move would cripple regulators' ability to oversee financial markets and implement the overhaul of financial regulations passed last year.
http://jlne.ws/gK9bC3

TARP Profit on Citigroup: $12.3 Billion
BY Tom Barkley, WSJ.com
The U.S. is set to record a net $312.2 million from its sale of its final 465.1 million warrants to purchase common shares of Citigroup Inc., the Treasury Department said Wednesday.
http://jlne.ws/icd8bp

IMF Sees Europe's Debt as Top Recovery Threat
By MICHAEL R. CRITTENDEN, WSJ.com
European officials need to expand the region's financial rescue fund and subject their banks to more rigorous stress tests to quell a key threat to the global economic recovery, the International Monetary Fund said Tuesday.
http://jlne.ws/fPkpCR

Traders Laying Groundwork For New Type Of Credit Derivative
By Katy Burne
A clutch of traders at big investment banks is trying to get a new kind of derivative instrument off the ground that would help them mitigate the risk of a growing correlation between interest rates and risk premiums in the credit markets.
http://jlne.ws/eTj0pW

Sarkozy: No Desire To Question Global Role Of US Dlr
iMarketNews.com
By calling for a reform of the world monetary system, France has no intention of calling into question the role of the U.S. dollar, French President Nicolas Sarkozy said Monday. Sarkozy, speaking at a press conference at the Elysee Palace, spelled out France's ambitious agenda for tackling global financial instability, growing payments imbalances and the institutional monetary order.
http://jlne.ws/f17UC8

Volcker Out, Immelt In on Economic Board
By SHERYL GAY STOLBERG and ANAHAD O'CONNOR, NY Times
SCHENECTADY, N.Y. - President Obama will name Jeffrey R. Immelt, the chief executive officer and chairman of General Electric, on Friday to run his outside panel of economic advisers, replacing Paul A. Volcker, the former Federal Reserve chairman, who is stepping down, the White House said.
http://jlne.ws/eEvxDs

Issa Asks for Geithner, Settles for Assistant for First Oversight Hearing
Bloomberg
U.S. House Oversight and Government Reform Committee Chairman Darrell Issa , who has said he will hold hundreds of hearings to challenge the Obama administration, tried to get Treasury Secretary Timothy Geithner for his initial one. Instead, he is settling for an assistant.
http://jlne.ws/h0KDsv

Banks Want Pieces of Fannie-Freddie Pie
By LOUISE STORY, NY Times
As the Obama administration prepares a report on the future of Fannie Mae and Freddie Mac, some of the nation's largest banks are offering a few suggestions. Wells Fargo and some other large banks would like private companies, perhaps even themselves, to become the new housing finance giants helping to bundle individual mortgages into securities - that would be stamped with a government guarantee.
http://jlne.ws/e6NOVG

Budget Deficit Is Expected to Grow 14% to $1.5 Trillion in Fiscal 2011
By COREY BOLES, WSJ.com
The Congressional Budget Office painted a grim picture of the federal government's finances Wednesday, saying the budget deficit would jump to nearly $1.5 trillion in the current fiscal year, largely because of a tax-cut extension enacted last year.
http://jlne.ws/eBE9f1

DJIA Tops 12000
By JONATHAN CHENG, WSJ.com
The Dow Jones Industrial Average vaulted over 12000 for the first time in almost three years and bounced around that milestone throughout the session, as investors cheered President Obama's State of the Union address and the unanimous decision by the Federal Reserve to stay the course on supporting the economy.
http://jlne.ws/hISn8E

Mortgage Giants Leave Legal Bills to the Taxpayers
By NY Times
Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress.
http://jlne.ws/fZUMDB

Muni funds record outflow
By Daniel Bases, Reuters
Municipal bond funds suffered a record outflow of cash in the week ended Jan. 19 while U.S. and European equity funds saw inflows as more cash moved off the sidelines, fund-tracker EPFR Global said on Friday.
http://jlne.ws/fYVJmu

CalPERS says investments grew 12.5% in 2010
Los Angeles Times
The smaller CalSTRS ends the year with a 12.7% return as the nation's two largest public pension funds get back on track after suffering steep losses during the recession. Investment returns at the nation's two largest public pension systems are back on track after suffering steep losses during the Great Recession.
http://jlne.ws/hScXUh


FOMC meeting:

FRB: FOMC statement--January 26, 2011
Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions. Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward....
http://jlne.ws/e3MF3i

U.S. Rate Futures: traders pare bets on 2011 Fed hike
Reuters
U.S. short-term interest rate futures traders pared bets that the Federal Reserve will start raising rates this year after the central bank left rates near zero and reiterated its promise to keep them there for an extended period.
http://jlne.ws/fMoRsU

**CN: Futures prices move to dip under a 60 percent chance of an increase in December to the Fed's target rate for overnight lending between banks.

United Fed Stands Pat
By Luca Di Leo And Jeffrey Sparshott, WSJ.com
Federal Reserve officials were united Wednesday in deciding to continue buying government bonds to boost the recovery, even as they acknowledged that the U.S. economy looks in better shape.
http://jlne.ws/hvmqMT

Instant view: Fed lukewarm on economy, jobs
Reuters
The U.S. Federal Reserve gave a lukewarm economic assessment on Wednesday despite recent signs the recovery was strengthening, saying high unemployment still justified its $600 billion bond-buying program.
http://jlne.ws/fyDhP9


Stories from Davos:

A Banker's Plaintive Wail
By Matthew Dalton - WSJ
A plaintive cry from one of the world's top bankers on behalf of his industry pierced through an otherwise tame Thursday morning panel discussion here in Davos:
http://jlne.ws/gxbsHS

Global economy fears ease at Davos forum
By Chris Giles in Davos, Financial Times
Participants at the opening sessions of the World Economic Forum in Davos on Wednesday shrugged off weak UK growth figures and expressed confidence that the global economy is set fair.
http://jlne.ws/ffVAaS

Wall Street Partying in Davos as Bankers Overcome Crisis Angst
Bloomberg
As Wall Street chief executive officers flock to the World Economic Forum, they'll be breathing a sigh of relief along with the Swiss mountain air: There are no panels on compensation or redesigning financial regulation.
http://jlne.ws/fiCEN4

**CN: At $20K just to buy a ticket for this forum, Davos is quite a party.

Davos: finding common ground in a complex world
By Patrick Jenkins - Financial Times
If anyone needed a reminder of the vastness of ambition that underpins the annual Davos meeting of the World Economic Forum, a quick glance at the programme of meetings on day one would do it.
http://jlne.ws/gW4rtv


Events

Making Sense of Credit Default Swaps (CDS), New York
January 26, 2011
Institute for Financial Markets Looks At CDS Market - New York
www.theifm.org

The 36th Annual International Futures Industry Conference
March 15-18, 2011
FIA's Annual Convention - Boca Raton
http://www.futuresindustry.org/boca-2011-program.asp

SIFMA 2nd Annual Private Client Conference
Apr. 7 and 8, 2011
SIFMA's Conference For Private Client Groups At All Levels - New York
http://www.sifma.org/events/event.aspx?id=22289


Exchanges, Clearing Houses & MTFs

NYSE Euronext Bond-Trading Venture To Go Live In March
By Jacob Bunge, Dow Jones Newswires
NYSE Euronext (NYX) aims to launch a new bond-trading effort in March after securing approval from U.S. securities market regulators, according to the exchange company. The Securities and Exchange Commission last week cleared NYSE Euronext to move ahead with a program that will see major brokers and electronic trading firms make a new market in the debt of companies listing shares on NYSE Euronext.
http://jlne.ws/fZnki7

CME Treasury Options To Expire Weekly, Eyes Key Economic Data
WSJ.com
Traders of U.S. interest rate derivatives have a new way to speculate on the release of key economic data and other market-moving events. Beginning Sunday evening, users of CME Group Inc. (CME) trading platforms can buy and sell options on Treasury futures that expire on a weekly basis. Treasury options currently expire only on a monthly basis.
http://jlne.ws/fGJD1x

ICE Surpasses $15 Trillion Milestone in Global CDS Clearing
NEW YORK, Jan. 25, 2011 /PRNewswire/ -- IntercontinentalExchange (NYSE: ICE), a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets, announced that its credit default swap (CDS) clearing houses surpassed $15 trillion in cumulative gross notional value and 400,000 transactions during the week ending January 21, 2011.
http://jlne.ws/99Rt1r


Firms & Banks

Break up the big banks, says merger mastermind Mathewson
The Scotsman
Veteran Scottish banker Sir George Mathewson has called for the break-up of the deal that defined his years of leadership at Royal Bank of Scotland and cemented his position a
http://jlne.ws/hsgN8I

Barclays CEO Diamond Says Banking Commission Won't Split Up U.K. Lenders
Bloomberg
Barclays Plc Chief Executive Officer Robert Diamond said John Vickers , chairman of the Independent Commission on Banking, won't recommend splitting up U.K. lenders.
http://jlne.ws/fLDJ9L

Barclays bank to axe 1,000 jobs
Straits Times
LONDON - BRITISH bank Barclays on Wednesday announced plans to axe 1,000 jobs and close its financial planning services unit, while the firm's investment banking division was hit with a 1.12 million pound (S$2.27 million) fine. The company said in a statement that it has entered into talks with employees at its Barclays Financial Planning unit, which offers face-to-face financial planning ...
http://jlne.ws/fiJX5R

Fitch Upgrades Citigroup's Individual Rating and Unsupported IDRs
Business Wire
Fitch Ratings has upgraded the Individual Rating of Citigroup Inc. (Citi) to 'B/C' from 'C'. In addition, Fitch has upgraded Citi's 'unsupported' long- and short-term Issuer Default Ratings (IDRs) to 'A-' and 'F1', respectively, from 'BBB+' and 'F2'. A complete list of ratings follows this release. The upgrades of Citi's unsupported ratings reflect its fundamental ...
http://jlne.ws/f7jyqQ

Treasury sells Citigroup warrants for $312 mln
Market Watch
The Treasury Department announced Wednesday that it sold Citigroup Inc. warrants for $312.2 million. The government sold 255 million A warrants for $1.01 per warrant, compared with a minimum bid of 60 cents set on Monday. The government sold 210 million B warrants priced at 26 cents per warrant, compared with a minimum bid of 15 cents per warrant. The buyers of the ...
http://jlne.ws/gwEzqd

Morgan Stanley sees threat banks could shrink credit
Business Standard India
Banks may shrink credit in order to meet tougher capital requirements, posing a "serious threat" to the real economy, Domenico Siniscalco, Vice President of Morgan Stanley International and country head for Italy, told Reuters.
http://jlne.ws/fAVJEj

Credit Agricole Hires Pao as Fixed Income Head in Thailand
Bloomberg
Credit Agricole CIB hired Pao Chatakanonta as head of fixed income markets for Thailand, according to an e-mailed media release.
http://jlne.ws/f7tXzp

Citigroup Bailout Warrants Will Be Auctioned by U.S.
BusinessWeek
The U.S. Treasury Department announced plans to auction warrants to purchase stock in Citigroup Inc. that taxpayers received as part of the bank's $45 billion rescue during the financial crisis.
http://jlne.ws/f7gv9r

HSBC chief drops Hong Kong move
Channel NewsAsia
HONG KONG: The new chief executive of HSBC has dropped plans to relocate to Hong Kong, where his predecessor was based to push the bank's Asia business, and will stay in London, a report said Tuesday.
http://jlne.ws/f9MYkY

American Express Falls Short With 48% Profit Jump
Forbes
In the fourth quarter of 2010, American Express saw profits shoot higher but not as high as analysts had forecasted.
http://jlne.ws/gs4QmW

Paulson posts more than $1bn in Citi gains
By Sam Jones in London and Dan McCrum in New York - Financial Times
Paulson and Co, the world's third-largest hedge fund manager, has told clients it has made more than $1bn from its stake in Citigroup over the past 18 months and expects US growth to accelerate this year.
http://jlne.ws/edPMRf

JPMorgan Refused Mortgage Repurchases It Also Sought, Ambac Assurance Says
Bloomberg
JPMorgan Chase & Co. demanded that a lender repurchase bad mortgages even as it resisted calls to buy back the loans from bonds created by Bear Stearns Cos., an insurer said in court papers.
http://jlne.ws/e5ADoT

Banks face major shake-up in plans being considered by inquiry
Daily Telegraph
The head of the independent commission examining whether the UK's biggest banks should be broken up warns the industry must prepare for wide-ranging reforms.
http://jlne.ws/gzeBfa

Goldman Sachs Bond Sale Signals Inflation Concerns Waning
Bloomberg
Goldman Sachs Group Inc .'s offering of 30-year bonds, its first in more than three years, signals waning concern among investors that inflation is accelerating.
http://jlne.ws/fHd2r5

UBS Snaps Up Two Impressive Ex-Deutsche Bankers To Run "Turbocharged" Equities Desks
Business Insider
Ricardo Honegger , the new Head of UBS Global Synthetic Equity, previously headed global markets and global banking for the Middle East North Africa region. He was also the chief country officer for the UAE.
http://jlne.ws/eSLk15

Citigroup gives CEO Vikram Pandit a big raise
Straits Times
CITIGROUP Inc is giving its CEO a big raise. The New York-based bank is lifting Vikram Pandit's base salary to US$1.75 million (S$2.25 million) from just US$1 a year effective immediately, according to a filing with the Securities and Exchange Commission on Friday.
http://jlne.ws/hHmZIN

Morgan Stanley Hires Goldman Bond Trader As Global Head Of Rates Unit
Dow Jones
The shuffling at Morgan Stanley (MS) continues, as the firm hired Glenn Hadden, a Goldman Sachs Group Inc. (GS) bond trader, as global head of its interest rates division.
http://jlne.ws/fEDXJS

RBS in talks to exit asset protection scheme
Reuters
Royal Bank of Scotland isin talks with the Treasury about ways in which the partlynationalised bank could leave the government's asset protectionscheme (APS) early, the Financial ...
http://jlne.ws/h3tuFE

Fifth Third raises funds to repay Tarp
By Telis Demos, Financial Times
Fifth Third, a leading Midwestern bank, sold $1.7bn in shares on Thursday to help repay funds the US Treasury lent it during the financial crisis.
http://jlne.ws/hR4wC6

Cantor Prepares to Debut Commercial-Mortgage-Backed Bond Offer
By Sarah Mulholland, Bloomberg
Cantor Fitzgerald LP, the bond broker working to transform itself into a full-service investment bank, is preparing to issue its first securities tied to commercial property loans.
http://jlne.ws/fVy99U

Was Barclays mis-selling? It's hardly a million dollar question
Daily Telegraph
Picture the scene. It's Who Wants To Be A Millionaire the Personal Finance Special, and Chris Tarrant turns to the nervous contestant and asks the following question: "OK, take your time, as there is a lot of money at stake here.
http://jlne.ws/dK0o99


Auctions & Statistics

NYFed_news NY Fed purchases $5.790 bln in Tsy coupons: NY Fed purchases $5.790 bln in Tsy coupons
The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system.
http://bit.ly/ieb7zN

Fed Buys $8.36 Billin In POMO
By Roger Nachman, Benzinga
The New York Federal Reserve purchased $8.36 billion in U.S. Treasury debt during its permanent open market operations (POMO) today. Dealers submitted $18.959 billion worth of debt, meaning the auction was more than five times oversubscribed, which is much higher than most auctions have been recently. This is something to keep an eye on going forward.
http://jlne.ws/fHfplD

Survey Indicates Inflation Expectation Still Muted
By Michael S. Derby, WSJ.com
U.S. households expect inflation to rise over the short term but remain contained over the longer run, shrugging off higher food and energy prices, in a positive sign for consumer spending patterns, according to a report Friday.
http://jlne.ws/fDdByl


Regulators

Noyer Urges More Flexible Rescue Fund
BY BRIAN BLACKSTONE AND NATHALIE BOSCHAT, WSJ.com
A top European Central Bank official urged euro-zone governments to make their €440 billion ($602 billion) crisis fund more flexible so that it can buy bonds of fiscally distressed governments and offer them short-term credit lines, a signal that the ECB wants to reduce its role in fighting the currency bloc's debt crisis.
http://jlne.ws/hMPtbl

IMF extends Poland $30bn credit line
BBC
The International Monetary Fund (IMF) has approved a two-year, $30bn (£19bn) credit facility with Poland, replacing a one-year arrangement agreed in July.
http://jlne.ws/eMUDUa

Accounting tweak could save Fed from losses
By Pedro Nicolaci da Costa, Reuters
Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.
http://jlne.ws/hHU3QM

Dodd-Frank Swaps Rules Deadline 'Unrealistic', O'Malia says
Bloomberg
The Dodd-Frank Act's "unrealistic" July deadline for rules to govern the swaps market may undermine regulators' efforts to increase transparency and reduce risk, Commodity Futures Trading Commission member Scott O'Malia said in a New York speech.
http://jlne.ws/hO2bJP

China’s Top Banking Regulator May Retire This Year
By Kelvin Wong, Bloomberg
China Banking Regulatory Commission Chairman Liu Mingkang may retire this year and be replaced by a senior executive from one of the country’s four biggest state- controlled banks, Ming Pao reported, citing people it didn’t identify.
http://jlne.ws/h47EaJ

OFT chief John Fingleton: 'more banks doesn't mean more competition'
Daily Telegraph
John Fingleton, chief executive of the Office of Fair Trading, has warned MPs that simply creating more banks will not solve competition problems in UK's financial services sector.
http://jlne.ws/i9BmD5

INTERVIEW-Budgets one way to 'throttle' Dodd-Frank - Garrett
Reuters
The head of a congressional panel that oversees U.S. financial regulation said on Tuesday that budget restraint is just one way Republicans are trying to "throttle" some of the Dodd-Frank banking reforms. U.S. Representative Scott Garrett, the Republican chairman of the House capital markets subcommittee, said he knows Democrats accuse Republicans of trying to throttle Dodd-Frank by restraining the budgets of agencies that must implement it.
http://jlne.ws/ezkDkP

The Dodd-Frank rules you don't know
By TIM KILADZE, Globe and Mail
The Dodd-Frank Act is an omnibus 1,200 page document that cracks down on things like consumer protection and derivatives trading. But many people don't know it also includes over 100 SEC and stock exchange mandates, and these will be implemented very soon.
http://jlne.ws/h5JMJL

**CN: This one's worth a read.

Getting financial regulations right - Crain's column from president and chief executive of SIFMA, Tim Ryan
By Tim Ryan, Crain's
The Dodd-Frank Act, legislation that fundamentally changed our financial system, is just 6 months old, and already regulators have made reasonable progress toward implementing the law. But much work still lies ahead, and 2011 will be a crucial year for the financial industry. Our focus will be to “get it right.” We operate in global financial markets where new rules must be written on a coordinated basis by regulators around the world.
http://jlne.ws/g7dWIH

Core Principles for Effective Deposit Insurance Systems - A methodology for compliance assessment
BIS Release
In June 2009, the International Association of Deposit Insurers (IADI) and the Basel Committee on Banking Supervision (BCBS) issued Core Principles for Effective Deposit Insurance Systems. Since December 2009, IADI has been collaborating with the BCBS, the European Forum of Deposit Insurers (EFDI), the International Monetary Fund (IMF), the World Bank, and the European Commission (EC) to develop a robust methodology to assess compliance with the Core Principles. A consultative document was published in November 2010. A final version incorporating the comments received was submitted to the Financial Stability Board in December 2010.
http://jlne.ws/dV9lph


OTC

DTCC and Markitserv Collaberate with Acadiasoft to Automate Collateral Messaging and Reduce Risk in OTC Derivatives
Press Release
The Depository Trust and Clearing Corporation (DTCC), MarkitSERV and AcadiaSoft today announced that they are working to deliver a joint solution for improving communication related to setting and maintaining the collateral required between counterparties to over-the-counter (OTC) derivative transactions. The solution is the first step taken by the three companies to develop a multi-functional collateral processing platform for the OTC derivative market.
http://jlne.ws/dMI2Yw

Derivatives Executives Are Wary Of Electronic Swaps Trading
By Katy Burne, Of DOW JONES NEWSWIRES
Moving a large portion of privately traded derivatives, or swaps, on to futures exchanges and other regulated execution platforms in accordance with new regulation will take a huge leap of faith from industry participants, panelists at a derivatives conference in New York warned Tuesday.
http://jlne.ws/fGfm19

Morningstar adds OTC Markets Group data to Quotes feed
Press Release
Morningstar (NASDAQ: MORN), a leading provider of independent investment research, today announced that the company has added OTC Markets Group data (previously known as Pink OTC Markets) to its Morningstar Quotes Data Feed.
http://jlne.ws/eaPQ4R

Newedge appointed swap counterparty by Aspect Capital on new UCITS launch
Press Release
Newedge, a global leader in multi-asset brokerage and clearing, announces its appointment by Aspect Capital Limited, as swap counterparty to the Aspect Diversified Trends Fund, a Dublin domiciled UCITs-compliant fund with daily liquidity.
http://jlne.ws/dxcSLk

SunGard’s Stream GMI Supports Eris Exchange Interest Rate Swap Futures
Press Release
SunGard’s Stream GMI post-trade derivatives solution now gives CME Clearing members the ability to use their existing trade capture and bookkeeping processes to clear Eris Exchange’s interest rate swap futures through CME Clearing. Support for OTC interest rate swaps clearing is a key element of SunGard’s strategy to support listed derivatives and the transition of OTC interest rate swap products to the clearinghouse model as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In addition to Eris Exchange, Stream GMI currently supports OTC interest rate swaps clearing with CME Group, International Derivatives Clearinghouse (IDCH) and LCH.Clearnet UK SwapClear.
http://jlne.ws/fEDzlB


Global News

Euro Zone inflation: The Good, The Bad and The Ugly
By Brian Blackstone, WSJ.com
With euro zone inflation above the ECB’s sub-2% target for the first time in over two years, and ECB officials sending hawkish signals of late, price pressures are being scrutinized more closely than usual in the euro bloc.
http://jlne.ws/fo6mWs

S&P downgrades Japan on debt worries
By Lindsay Whipp and Mure Dickie in Tokyo, Financial Times
Standard & Poor's has cut Japan's sovereign debt rating for the first time since 2002, saying the government lacks a "coherent strategy" for dealing with its soaring state debt.
http://jlne.ws/ebalEC

Kenyan Bank Earnings to Rise 30% in 2010 on Margins, African Alliance Says
Bloomberg
Kenya's banks are poised to increase earnings by an average of 30 percent this year as interest margins widen, African Alliance Securities Kenya Ltd. said.
http://jlne.ws/hzJt2W

China Drops Hint On Forex Policy, May Auger Higher Yuan
By Ian Talley, Automated Trader
China hinted in talks during President Hu Jintao's visit this week that it might be looking more broadly at the rationale for setting the exchange rate. A potential change may augur a higher yuan value.
http://jlne.ws/h6Xzgd

Madrid tells banks to boost core capital
By Victor Mallet in Madrid - Financial Times
Spain will force its weaker savings banks to raise more capital or face nationalisation in an effort to restore confidence in the Spanish economy.
http://jlne.ws/f5VEnd

Big banks losing share to Indie fund groups
By Ruth Sullivan, Financial Times
Big asset managers, particularly those with large banking or insurance parents, have traditionally been the winners in Europe. Economies of scale, distribution networks and plentiful resources have all contributed to their dominance, leaving little space for independent investment houses to compete successfully, especially in Spain, France and Italy where asset management is largely part of banking group activity.
http://jlne.ws/hmvgry

Oversight of banks costs US far more than EU
By Brooke Masters in London - Financial Times
The US spends more than six times as much to supervise banks and other credit institutions as the European Union, research has found.
http://jlne.ws/gnA2Hy

Goldman Downplays Spain Insolvency Fears
RTT News
Spain does not have an underlying solvency problem and the prospect of a default is highly unlikely, Goldman Sachs said on Friday.
http://jlne.ws/hNbESq

Lisbon move points to end of risk-free sovereigns
By Gillian Tett, Financial Times
Another week, another bout of angst about sovereign and municipal risk. But as investors fret about Spain and Belgium - or Illinois and California - they should take a close look at a fascinating little development in Lisbon.
http://jlne.ws/hziCo8

Wema Bank of Nigeria Sells $100 Million of Non-Performing Loans to Amcon
Bloomberg
Wema Bank Plc , a Nigerian lender that failed a central-bank audit in 2009, sold 15.2 billion naira ($100 million) of loans to the state-owned company set up to support the nation's banks, spokesman Tunde Olofintila said.
http://jlne.ws/f4OsRv