June 16: U.S. Regulators blast European Banking System [Newsletter]

June 16, 2011

JLN Interest Rates - http://www.jlninterestrates.com


Conversation Starter

ECB Publishes Financial Stability Review

Since 2004, the European Central Bank (ECB) has published the Financial Stability Review twice a year. It's a report that provides an overview of the possible sources of risk and vulnerability to financial stability in the euro area. The review aims to promote awareness of issues that are relevant for safeguarding the stability of the euro area financial system both within the financial industry and among the public at large.

The June 2011 Financial Stability Review indicates that despite improving global and euro area economic and financial conditions, the overall outlook for financial stability has remained very challenging in the euro area. In particular, "important decisions to introduce concrete policy measures at the EU level to strengthen backstop mechanisms aimed at mitigating financial vulnerabilities have not been sufficient to overcome all difficulties." The report goes on to say that for the third successive year since the intensification of the financial turmoil in the autumn of 2008, "risks are still prevailing across major sectors of the euro area economy, which pose challenges not dissimilar to those in many other advanced economies.

In particular, the report says, concerns of financial market participants regarding the interplay between sovereign and financial sector risk remain elevated. "In view of challenges related to the implementation of the consolidation programme in Greece, which have grown since the publication of the last FSR in December 2010, market concerns have risen as evidenced, for example, by an inversion of its sovereign credit default swap curve. In light of the potentially very dangerous implications of sovereign debt restructuring for the debtor country, including its banking, a determined and unwavering focus on improving fundamentals through both macroeconomic and structural policy reforms in vulnerable countries is required and within reach. In fact, programmes of adjustment, negotiated with the European authorities and the International Monetary Fund (IMF), are now in place and should be rigorously implemented," the report says.

See the entire ECB report here.





Related Stories:

Greece isn’t priced in, and neither is Ireland
MarketWatch
It’s not a huge shock that Greece is struggling to implement a new austerity package and that Europe’s most important institutions — Germany, France, the European Central Bank and the European Commission — can’t agree on what to do next.
http://jlne.ws/l2Wxw3

Defiant Papandreou says he’s sticking to reforms
Euro News
These are tough times for George Papandreou. The resignations of two prominent members of his socialist government have thrown the Greek Prime Minister’s plans to reshuffle his cabinet into disarray.
http://jlne.ws/kGHvr2

Papandreou Pleads With Parliamentary Allies to Back Greek Austerity Effort
By Maria Petrakis and Natalie Weeks, Bloomberg
Greek Prime Minister George Papandreou’s called on his allies in parliament to back his austerity plans that aim to stave off the euro region’s first default.
http://jlne.ws/lfRZWt

Greece Credit-Default Swaps Surge to Record 2,189 Basis Points, CMA Says
By Abigail Moses
The cost of insuring against default on Greek, Irish and Portuguese government debt surged to records, driving a gauge of sovereign bond risk to an all-time high, on concern Europe’s deficit crisis is worsening.
http://jlne.ws/keHC57

Ireland Snubs ECB Effort to Avoid Meltdown With Threat to Bank Bondholders
By Jana Randow and Simon Kennedy, Bloomberg
Ireland opened a new front in the drive to restructure debt on the euro area’s periphery, adding to the European Central Bank’s concerns as it tries to head off another wave of financial turmoil.
http://jlne.ws/jN1WFC

IMF: Ready To Support Greece But Need `Full Financing' Assurance
WSJ.com
The International Monetary Fund said Thursday it stands ready to support Greece but needs the Greek government to approve its economic restructuring plans and Europe to ensure "full financing" for the program, which is set to expire in 2013. "We stand ready to continue our support for Greece subject to adoption of the economic policy reforms agreed with the Greek authorities," said IMF spokeswoman Caroline Atkinson.
http://jlne.ws/jfVuxF

China: Can Big Brother Bail Out Greece, Europe Again?
By Omar Alvi, IB Times
China is making the rounds amongst the rumor-mill this morning. Rumor has it that China will bail out Greece.
http://jlne.ws/mNIyWt

Europe at mercy of rating agencies to introduce regulatory steps
The Economic Times
A year after it pledged to curb the power of the credit rating agencies, Europe remains at their mercy as it struggles to introduce regulatory steps and the agencies show little sign of softening their stance on the region's debt crises.
http://jlne.ws/jglDc4

Greece Branded With World’s Lowest Credit Rating by S and P on Default Threat
By Jennifer Ryan and Gabi Thesing, Bloomberg
Greece was branded with the world’s lowest credit rating by Standard & Poor’s, which said the nation is “increasingly likely” to face a debt restructuring and the first sovereign default in the euro area’s history.
http://jlne.ws/iLTtEx

Why some Greek bonds might be worth more than others
The Economist
IT TOOK some time, but Germany finally seems to be addressing how, rather than if, a Greek restructuring will occur. Finance Minister Wolfgang Schäuble has written to the ECB demanding a lengthening of bond maturities as a condition of further German lending to Greece. As our leader this week argues, this will not be enough to restore Greece to solvency. If it wasn't for ECB opposition, Germany might be willing to go much further. Last year Angel Merkel called for irresponsible investors to be punished for mispricing sovereign default risk. She is not averse to imposing haircuts on bondholders. Bailing them out, after all, creates moral hazard.
http://jlne.ws/mdXfv6

Ireland to call on Anglo Irish senior bond holders-state media
Reuters
Ireland's government will seek to impose losses on senior bondholders in Anglo Irish Bank [ANGIB.UL] and Irish Nationwide [IRNBS.UL], the state broadcaster RTE quoted Finance Minister Michael Noonan as saying.
http://jlne.ws/k5Y5dz


Lead Stories

U.S. regulators blast European banking system
MarketWatch
U.S. bank regulators on Thursday criticized foreign regulators, commenting on how European financial institutions continue to set their own capital requirements, leaving prospects for future bank problems “unsettlingly” high.
http://jlne.ws/lZCPIh

Most Community Banks Will Pay Lower Premiums under FDIC Assessment Rules
By James W. Fuchs and Andrew P. Meyer, Federal Reserve Bank of St. Louis
Before the passage of the Dodd-Frank Act, FDIC insurance premiums were assessed as a percentage of insured deposits in each banking institution. Under Section 331 of the act, the assessment base is now defined as average total assets minus tangible equity. Thus, the new base contains liabilities that did not previously enter into the calculation. Although the new base is larger, the lower assessment rates are more than enough to offset this effect for more than 99 percent of community banks with less than $10 billion in total assets.
http://jlne.ws/iV5tWN

FDIC OKs minimum capital standard for banks
By Ronald D. Orol, MarketWatch
The Federal Deposit Insurance Corp. on Tuesday adopted a rule requiring U.S. big banks be subject to the same minimum standards for capital as community banks. The rule is part of the government’s ongoing implementation of the Dodd-Frank bank reform act.
http://jlne.ws/k4809f

Regulators move to delay swaps crackdown, bolster banks
By Christopher Doering and Dave Clarke, Reuters
U.S. regulators threw a temporary bridge across the increasingly awkward gap between the idea of regulating the $600-trillion swaps market and the reality of actually doing it.
http://jlne.ws/ljAH92

Is Boring Banking Better?
Forbes
Bloomberg Businessweek says that the financial firms are shrinking "as they deal with a past that won't go away and a future of lower revenues and fewer jobs." New regulations may limit fees and higher capital requirements will hit profit margins.
http://jlne.ws/iOnVvZ

Fed expanding capital tests for US banks
Reuters
The Federal Reserve plans to expand the number of banks it will subject to annual tests used to determine if stock dividends can be increased and whether an institution is holding enough capital. On Friday the Fed said it is proposing that banks with $50 billion or more in assets be subjected to the capital testing regime as well.
http://jlne.ws/mrENQP

A Bank Regulatory Logjam May Be Easing
By BINYAMIN APPELBAUM, NY Times
WASHINGTON — The Obama administration, moving to fill vacancies at several financial regulatory agencies, is considering nominating Thomas J. Curry to head the Office of the Comptroller of the Currency, which oversees most of the nation’s large banks, according to several people with knowledge of the deliberations.
http://jlne.ws/jVPssn

Banks battle over US tax law
By Tom Braithwaite in Washington, Vanessa Houlder in London, Nikki Tait in Brussels and James Wilson in Frankfurt, Financial Times
Banks and foreign governments are mounting an increasingly desperate push against a sweeping US tax law that will force overseas institutions to report their American clients to the Internal Revenue Service.
http://jlne.ws/iJD9ee

FITCH: Asia-Pacific structured finance mostly stable in 2010; Japan excepted
Reuters
Fitch Ratings says in a Special Report that Asia-Pacific structured finance (SF) ratings were considerably less volatile in 2010 than in the previous year. The total number of rating changes in 2010 was 76, down from 173 in 2009.
http://jlne.ws/miNKiT

Global Financial Strategy - Asian regulators hit back after US jibes
By Will Henley, GFS News
Asian regulators have hit back following American jibes that other national authorities may provoke a "race to the bottom" by not fully implementing globally agreed financial reforms.
http://jlne.ws/leEjYB

Biggest Buyer Of U.S. Treasury Debt China Boosted Its Holdings In April. First Increase After Five Straight Declines
By MARTIN CRUTSINGER, Associated Press
China, the biggest buyer of U.S. Treasury debt, boosted its holdings in April, the first increase after five straight declines.
http://jlne.ws/lIGtuk

US demands tax tolerance of foreign financial groups
By Gillian Tett, Financial Times
This summer, the senior management of one of Asia’s largest financial groups is quietly mulling a potentially explosive question: could it organise some of its subsidiaries so that they could stop handling all US Treasury bonds? Their motive has nothing to do with the outlook for the dollar. Nor does it reflect fears about the US debt ceiling (or the risk that the US will soon default if it fails to raise the legal limit on bond issuance).
http://jlne.ws/kr0kAh

Joe Biden group looks for budget deal
By DAVID ROGERS, Politico
With 2012 appropriations bills already moving through the House, White House budget talks return Tuesday to where they began six months ago: Republican demands for deep cuts from domestic spending and foreign aid.
http://jlne.ws/lstJVe

ECRI's Achuthan: A Prolonged Slowdown
ECRI
ECRI's Lakshman Achuthan talks Simon Constable about a drawn-out slowdown ahead for the U.S. economy, including more sluggish jobs growth that could be around for months to come.
http://jlne.ws/iZL2ID

Economists React: Good News, Bad News for U.K. Inflation
By Tim Hanrahan, WSJ.com
The annual rate of inflation in the U.K. remained at 4.5% in the year to May, in line with expectations, as a decline in travel costs offset higher food prices and a record rise in prices for alcohol and tobacco. Below, economists react to the data, and say what they mean for future Bank of England rate moves.
http://jlne.ws/kbsufx

Chicago Fed Debuts Calculator For Derivatives-Market Revamps
By Jacob Bunge Of DOW JONES NEWSWIRES
The Federal Reserve Bank of Chicago has devised a computer program that could help central banks and regulators in other countries measure the effect of their own derivatives-market overhauls.
http://jlne.ws/jnnWlo

Experts worry that the risk of falling into another recession has increased
By Chris Isidor, CNN Money
Experts worry that the risk of falling into another recession has increased, according to a CNNMoney economic survey.
http://ow.ly/5eYgR

The eurozone heads for break up
Nouriel Roubini
Financial Times
The muddle-through approach to the eurozone crisis has failed to resolve the fundamental problems of economic and competitiveness divergence within the union. If this continues the euro will move towards disorderly debt workouts, and eventually a break-up of the monetary union itself, as some of the weaker members crash out.
http://jlne.ws/mOcvs4

In praise of Stanley Fischer
By Mohamed El-Erian
Financial Times
Based on professional qualifications and cultural fit, Stanley Fischer is the perfect candidate for managing director of the IMF. He would likely prevail in an open, transparent and merit-based selection process. The question is whether European attempts to preclude this can still be overcome by countries that care about the legitimacy of the institution and the beneficial role it should play in the global economy.
http://jlne.ws/iw3Mlf

Too Big to Fail, or Too Trifling for Oversight?
By ERIC DASH and JULIE CRESWELL, NY Times
But over the last several months, executives from more than two dozen financial companies and their trade groups have paraded into the Treasury Department, the Federal Reserve and other government agencies to try to persuade top regulators that they are not large or risky enough to threaten the financial system if they should ever collapse.
http://jlne.ws/mECySd

KarlRove & Co.: US Economic Confidence Plunges On Anniversary Of Recovery Summer
U.S. economic confidence plunges...
http://jlne.ws/lM5JiF

Fed's Lacker says disappointed in U.S. recovery
Reuters
The U.S. economy is recovering only slowly and growth could remain soft for some time as employers remain reticent about hiring, Richmond Federal Reserve Bank President Jeffrey Lacker said on Monday.
http://jlne.ws/iZSxpW

Chill out on QE3, but beware debt default: Sonders
By Jonathan Stempel, Reuters
The economy does not need a third round of stimulus but could convulse if lawmakers fail to raise the nation's debt ceiling, the chief investment strategist at the largest U.S. discount brokerage operator said on Wednesday.
http://jlne.ws/kqYCTD

Fed's Dudley: Growth to pick up, but risks increased
Market News International
New York Federal Reserve Bank President William Dudley Friday said that it is important to watch a broad variety of inflation indications, noting some have "drifted upward" in the first half of 2011 but have come down in recent weeks.
http://jlne.ws/mL04eU

The US economy flirts with its stall speed
Gavyn Davies - Financial Times
The recent slowdown in the US economy raises the question of whether the growth of output may have dropped below the so-called “stall speed”. This is the growth rate at which a healthy expansion can no longer be maintained, after which the economic engine misfires and the US heads back toward recession.
http://jlne.ws/ijuy3r

Shiller Sees ‘Substantial’ Probability of Recession
By Bradley Davis, WSJ.com
Noted economist Robert Shiller said Wednesday there was a “substantial” probability the U.S. could lurch again into recession. Noting weak global data — including a stubbornly depressed U.S. housing market — were flashing warning signs, the Yale University economist said the economy right now faced a “tipping point.”
http://jlne.ws/lGkfOM

D.C. Council OKs Local Tax on Non-District Munis
By Lynn Hume, The Bond Buyer
The District of Columbia Council voted 11 to 2 to approve a proposed $10.8 billion budget for fiscal 2012 that would impose a local tax on non-district municipal bonds beginning on Jan. 1, 2011.
http://jlne.ws/jSwDpS

CFTC Moves To Delay Some New Derivatives Rules Almost Six Months
By Jamila Trindle Of DOW JONES NEWSWIRES
Commodity Futures Trading Commission members are set to consider delaying certain swaps rules until as late as December 31, 2011 in order to head off confusion in the over-the-counter derivatives market as regulators miss the approaching one-year deadline set by Congress for writing the new rules.
http://jlne.ws/ijZZ3x

Bernanke hits out at debt ceiling impasse
By Robin Harding in Washington - Financial Times
Ben Bernanke has lashed out at Washington’s pitched battle over an increase in the federal debt limit, calling it the “wrong tool” to force changes in fiscal policy.
http://jlne.ws/lXWVTy

Mario Draghi Presents His Credentials As Candidate ECB President
Press Release
Mario Draghi, candidate designate for the European Central Bank presidency, told Economic and Monetary Affairs Committee MEPs on Tuesday that the ECB must not be diverted from its primary goal of price stability and that he would use the European Parliament venue to strengthen the ECB's accountability to citizens. Voluntary involvement of private investors as part of a solution to the Greek crisis is workable, he added.
http://jlne.ws/iP8byl

UK government to back separation of banks
Boston Globe
The British government intends to force banks to insulate their retail operations from their more volatile investment banking, a Treasury source confirmed Wednesday.
http://jlne.ws/kQvl5k

Faith in FinReg Low, Says Grant Thornton Poll
Forbes
The Dodd-Frank Financial Reform Act, better known as FinReg, was supposed to reign in ill-gotten gains and regulate the trillion dollar derivatives market starting 11 months ago.
http://jlne.ws/kKnidH



Events

Treasury Futures Basis: Beyond the Risks
June 16, 2011
IFM's Course On the Treasury Futures Basis - New York City
http://jlne.ws/kdOeSQ

Treasury Futures: Using International Fixed-Income and Money Market Spreads
June 16, 2011
IFM's Course On Using International Fixed-Income and Money Market Spreads - New York City
http://jlne.ws/kdOeSQ

Making Sense of Credit Default Swaps
June 22, 2011
IFM's Course On Credit Default Swaps - Chicago
http://jlne.ws/kdOeSQ

FIA Treasury & Rates Forum
September 14, 2011
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP








Economic News

Federal Reserve Bank of Cleveland: PPI rises in May
The Producer Price Index (PPI) for finished goods rose at an annualized rate of 2.5 percent in May, compared to an 11.5 percent growth rate over the previous six months and a 12-month growth rate of 7.3 percent.
http://jlne.ws/j7AKEO

Business inventories rise 0.8 percent in April
Reuters
Business inventories rose modestly in April amid a small increase in stocks of motor vehicles, a government report showed on Tuesday.
http://jlne.ws/mKZAOk

GDP impact of oil price shock
By Theo Janse van Rensburg, World Bank
The current turmoil in the Middle East and North Africa has been associated with a $22/bbl increase in oil prices from $90/bbl in December 2010 to $112/bbl by late April 2011 (a 40% increase over the average price of $79.60/bbl in 2010).
http://jlne.ws/jmdsvn

Autos Pull Retail Sales Lower
BY TOM BARKLEY AND JEFFREY SPARSHOTT, WSJ.com
U.S. retailers in May suffered the first drop in sales in 11 months, as Americans facing higher bills at the grocery store and fuel pump cut back on big-ticket items like cars and appliances.
http://jlne.ws/kknG5R

NAHB: Builder Confidence Declines To Lowest Level Seen Since September of 2010
After holding at a low but steady level for the past six months, builder confidence in the market for newly built, single-family homes declined three points in June to a reading of 13 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The last time the index was this low was in September of 2010.
http://jlne.ws/lB12EP






Exchanges, Clearing Houses & MTFs

Open interest of over 400K is a new record for the CME Group US Ultra Treasury bond futures, first introduced in the first quarter of 2010
http://jlne.ws/9zFuH0

NYSE Liffe U.S. Reaches New Records in Volume and Customer Participation
Press Release
NYSE Liffe U.S., the U.S. futures exchange of NYSE Euronext (NYX), today announced that the exchange has reached a key milestone in customer participation with total exchange Open Interest surpassing a half million contracts and approaching 550,000. Less than 3 months after launching Eurodollar and U.S. Treasury futures on the exchange, Open Interest is just under 470,000 with more than 4 million total contracts traded. This level of volume, open interest and liquidity is evidence of the rapid acceptance of NYSE Liffe U.S. by customers and is an unprecedented accomplishment for a new futures exchange.
http://jlne.ws/mkWHSE













Firms & Banks

ICAP Announces Appointment Of Brigitte Trafford As Director of Corporate Affairs
Press Release
ICAP plc (IAP.L), the world’s premier interdealer broker, announced today that it has appointed Brigitte Trafford as Director of Corporate Affairs. She will be responsible globally for all aspects of communications including investor relations, media relations, customer and employee communications and coordination of public affairs when she takes up her new role on 11 July 2011
http://jlne.ws/mDKE4T

U.S. Criticizes BofA
BY RUTH SIMON, WSJ
A U.S. official said Bank of America Corp. "significantly hindered" a federal investigation of the company's foreclosure practices. In a seven-page statement filed June 8 in an Arizona state court in Phoenix, William W. Nixon, a Department of Housing and Urban Development assistant regional inspector general, detailed numerous examples in late 2010 when officials of the Charlotte, N.C., bank allegedly failed to cooperate with investigators.
http://jlne.ws/jFdUsF

Goldman Intern Had Link to Libyan Fund
CNBC
Goldman Sachs gave a paid internship to a top Libyan official's relative while the bank was carrying out lossmaking trades on behalf of the country's sovereign wealth fund, the Financial Times has learnt.
http://jlne.ws/lsxetd

Goldman joins disclosure fight over Lehman claims
Nick Brown - Reuters
Goldman Sachs Group Inc and other banks fighting for control of Lehman Brothers Holdings Inc's bankruptcy have joined efforts to avoid sharing information about claims against the failed investment bank.
http://jlne.ws/kbuJFR

Deutsche Bank's Chief Casts a Long Shadow in Europe
International Herald Tribune
Josef Ackermann, chief executive of Europe's largest bank, emerged from the 2008 financial crisis with deep influence on the Continent's financial future.
http://jlne.ws/lRsyGK

UBS: Average adviser hitting million-dlr by 2014
Jennifer Hoyt - Market Watch
The Americas brokerage arm for UBS AG (UBS, UBSN.VX) expects its average adviser to become a $1 million producer sooner than the company previously anticipated, a top executive said Thursday.
http://jlne.ws/jADOIg

UBS Is Staying in Stamford, Mayor Says
The Daily Stamford
Stamford Mayor Michael Pavia says UBS has told him it will not be moving out of Stamford.
http://jlne.ws/kSFvQ8

Morgan Stanley Trades as Though 'Worth More Dead,' Bernstein's Hintz Says
Bloomberg
Morgan Stanley (MS) , owner of the world's largest brokerage, could shut down its trading businesses and the firm would be worth 28 percent more than yesterday's share price, according to Brad Hintz, a Sanford C. Bernstein & Co. analyst.
http://jlne.ws/it3oAw

Goldman settles probe over research huddles
eFinancial News
Goldman Sachs will pay $10m to settle an investigation by Massachusetts' securities regulator into communications among its analysts, traders and select clients.
http://jlne.ws/jEXG8C

ING Readies Sale of U.S. Online Bank
BY ROBIN VAN DAALEN AND MAARTEN VAN TARTWIJK, WSJ
AMSTERDAM—ING Groep NV said Friday it is taking steps to divest its U.S. online bank without indicating when a sale would happen, and said its priority for 2011 is to prepare its insurance businesses for a stock-market listing.
http://jlne.ws/lxJ8jx

Lazard Hires Structured Credit Advisory Team
Business Wire
LONDON--(BUSINESS WIRE)--Lazard Ltd (NYSE:LAZ) today announced the hire of an experienced team of senior credit professionals to broaden the firm's Capital Structure Advisory business, effective immediately. Led in Europe by Managing Director Alan Patterson, the Structured Credit Advisory team brings a broad range of complementary skills in structured credit products...

J.P. Morgan ousts mortgage chief
Crain's New York Business
J.P. Morgan Chase & Co., the second-largest U.S. bank, ousted mortgage chief David Lowman after it overcharged active-duty military personnel on loans and improperly foreclosed on other borrowers. "Dave Lowman and I have decided he will leave the firm," said Frank Bisignano, the head of home-lending, Tuesday in an internal employee memo obtained by Bloomberg News ...
http://jlne.ws/iPzRNc

JPMorgan shuffles top retail bank executives
Reuters via Yahoo! Canada News
JPMorgan Chase & Co shuffled several retail banking executives, signaling Chief Executive Jamie Dimon's determination to rebuild the bank's profits and elevate in-house talent to high-profile roles.
http://jlne.ws/j33m7o

RBS takes control of £1 billion Marriott portfolio - report
Reuters via Yahoo! UK & Ireland News
Royal Bank of Scotland has taken control of 42 Marriott hotels across Britain and has appointed Ernst & Young as receivers of the 1 billion pound ($1.64 billion) portfolio, the Financial Times reported on Wednesday.
http://jlne.ws/lvRUUG

Barclays boss to sharpen profitability plan
Reuters via Yahoo! UK & Ireland News
Barclays will on Wednesday lay out its roadmap for how cost-cutting, axing some businesses and dealing with tougher regulations will revamp the bank and boost profitability.
http://jlne.ws/jgepAl






Regulators

Dodd-Frank Rules To Be Finished In Same Order Proposed -CFTC
By Katy Burne Of DOW JONES NEWSWIRES
The earliest set of completed rules stemming from the Dodd-Frank financial overhaul law will likely focus on anti-manipulation, reporting by large trading firms and certain clearinghouse procedures, Gary Gensler, chairman of the Commodity Futures Trading Commission, said Thursday. That's because those rule proposals were released first, in October and November following passage of the Dodd-Frank law last summer, Gensler told reporters at an industry conference in New York. Rules that will come later include capital and margin requirements for backstopping trades, segregation of margin for cleared swaps and a range of product definitions, since these were proposed more recently, Gensler said at the Sandler O'Neill + Partners global exchange and brokerage conference.

Dodd-Frank Swaps Rules to Create ‘Black Hole’ Because of Unresolved Issues
By Alan Bjerga, Bloomberg
Swaps users may face a “black hole” when Dodd-Frank Act rules take effect next month because too much remains unresolved for markets to operate properly, the Senate Agriculture Committee’s top Republican said.
http://jlne.ws/lo88fP

Bernanke, Fiscal Sustainability--June 14, 2011
I am pleased to speak to a group that has such a distinguished record of identifying crucial issues related to the federal budget and working toward bipartisan solutions to our nation's fiscal problems. Today I will briefly discuss the fiscal challenges the nation faces and the importance of meeting those challenges for our collective economic future. I will then conclude with some thoughts on the way forward...
http://jlne.ws/l9HIdw

IMF board blocks Fischer candidacy
By Alan Beattie in Washington and Tobias Buck in Jerusalem, Financial Times
The board of the International Monetary Fund has blocked the application of Stanley Fischer, governor of the Bank of Israel, to head the organisation, leaving only two candidates in contention. The candidacy of Mr Fischer, 67, who announced his decision to run for the position of managing director on Saturday, would have required IMF members to waive a requirement that applicants be younger than 65.
http://jlne.ws/kZnuVg

SEC Moves To Prevent Swap-Market Confusion In July
By Jamila Trindle and Jessica Holzer Of DOW JONES NEWSWIRES
The Securities and Exchange Commission moved to prevent confusion in the $600 trillion over-the-counter derivatives market next month when several new rules are set to take effect even though regulators haven't finished work on other parts of a vast new regulatory regime for derivatives.
http://jlne.ws/lOfbBW

CFTC, SEC to Host Public Roundtable Discussion on Proposed Dealer and Major Participant Definitions under Dodd-Frank
The staffs of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) today announced that they intend to hold a joint public roundtable on June 16, 2011, to discuss proposed definitions required under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
http://jlne.ws/lTb9Iw

CFTC Could Grant Exemptions While Finishing Swap Rules - NY Lawyers
By Katy Burne, DOW JONES NEWSWIRES
The Commodity Futures Trading Commission has the power to grant exemptive relief to swap market participants while it finalizes rules stemming from last year's Dodd-Frank financial overhaul law, according to the New York City Bar Association. In a letter to the Commission on Monday, the Association's Committee on Futures and Derivatives Regulation said that while the agency does not have the power to exempt a party altogether from the requirements of Dodd-Frank, the Committee believes the CFTC does have the power under the Act to grant exemptive relief from some of its own rules.
http://jlne.ws/kk0zYX

CFTC Chairman Gary Gensler: Testimony Before The House Committee On Financial Services
Press Release
http://jlne.ws/lUavxw

King commits Bank to ‘big picture’ regulation
By Chris Giles, Brooke Masters and George Parker, FT.com
Sir Mervyn King has committed the Bank of England to focusing on big risks to the banking system when it takes charge of financial regulation at the end of next year in an attempt to lower the cost of bank regulation and reduce the burden of data collection.In his Mansion House speech to a City audience, the Bank governor called for powers for sweeping top-down regulation, rather than a return to a “light touch” approach.
http://jlne.ws/lYwN6D







OTC

Swaps Veteran Thomas Jasper Joins Trading Venue
By Katy Burne, Dow Jones
Thomas Jasper, a founding chairman of the International Swaps and Derivatives Association, has been hired by Traccr, a London-based swap trading venue, as its strategic adviser, the company announced late Monday. Traccr is a request-for-quote portal for the electronic trading of credit derivatives. It is regulated by the U.K. Financial Services Authority and has approvals to do business in 16 European countries.

ISDA Announces New IIGC Co-chairs
Press Release
The International Swaps and Derivatives Association, Inc. (ISDA) today announced that Athanassios Diplas of Deutsche Bank and Charles Mulhern of Wellington Management Company have agreed to serve as co-chairs of the ISDA Industry Governance Committee (IIGC). The new co-chairs succeed Stephen O'Connor, who has stepped down as IIGC chair following his election as chairman of ISDA’s board of directors in April, 2011.
http://jlne.ws/kWsW7t

SIFMA Statement On CFTC Announcement On Swap Market Rules
Press Release
SIFMA today issued the following statement from Ken Bentsen, Executive Vice President, following the announcement by the U.S. Commodity Futures Trading Commission that it would address the issue of certain provisions of new swap market rules that are scheduled to go into effect next month but rely on or require other rulemakings, which are not yet finalized:
http://jlne.ws/ioMIgS









Global News

Swiss National Bank Warns Franc Strength Will Hurt Economy
Daily FX/ The Street.com
The Swiss National Bank has kept its interest rates on hold at 0.25% as was widely expected. The accompanying statement held few surprises and confirmed what many had already suspected to be true. The statement said that franc strength is impacting exports, the growth outlook and is one of the main risks to growth alongside the potential overheating real estate sector.
http://jlne.ws/j4JOA2

French court postpones decision on Lagarde probe
By Peggy Hollinger, FT.com
Christine Lagarde, French finance minister, will have to wait another month to know whether she will be placed under judicial investigation for her role in the award of a €285m payment to controversial businessman Bernard Tapie. A French court on Friday decided to postpone until July 8 a decision on whether to launch a full judicial inquiry into Ms Lagarde’s actions in resorting to an arbitration panel in a long-running legal dispute with Mr Tapie.
http://jlne.ws/ikMjxu

Spain Approves Measure to Free Up Labor Market
By RAPHAEL MINDER, The New York Times
The Spanish government approved Friday measures intended to reduce chronically high unemployment by introducing more flexibility in labor relations, despite failing to get support from employers and unions for the changes.
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Dubai Meeting Potential Bond Investors June 13-14
http://jlne.ws/jNinsw

Financial Policy Committee holds its first meeting
BBC
The Bank of England's new Financial Policy Committee (FPC) will hold its first quarterly meeting on Thursday.
http://jlne.ws/lMWzqE




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