more weirdness at the consumer direct website September 15, 2007
Posted by Bradley in : Uncategorized , comments closedAfter reading the material on Christmas savings plans at Consumer Direct, I started to read the advice about borrowing money, and then started looking at the suggested template letters for complaining to providers of goods and services. All well and good. But I noticed that there’s an odd picture at the edge of the web page showing a partly clothed woman wearing a construction helmet. What does she have to do with complaint letters, I wonder? Well, she seems to be related to advice about holidays – presumably the reference is to people turning up for their holiday to find the hotel they are staying in is only half built. But she turns up on pages that have nothing to do with holidays, and, in any case, why don’t they have a picture of a man in surf shorts and a construction helmet? It turns out they do have pictures of men – one is wearing a lurid green sweater that looks as though it shrank in the wash, another older bald man in a pale blue shirt is holding a steering wheel and looking as though he is about to crash into something. There’s another woman too – this one is covered in food that seems to have escaped from a faulty blender. The nearly naked woman is the only one of the bunch who looks remotely intelligent or capable…..
musings on financial education and christmas savings September 15, 2007
Posted by Bradley in : Uncategorized , comments closedThe UK Treasury set up an independent review of generic financial advice (the Thoresen review). Next week there will be a pilot of face-to-face, internet, and telephone generic financial advice.
In looking at the Consumer Direct website to see if there is any information available before the launch (scheduled for Monday 17 September) I came across (post Farepak collapse) pages on Christmas savings. There is a handy comparison chart, which shows the differences between various products. I find it a bit confusing that the chart uses large green ticks (UK term) or check marks (US term) to identify product characteristics. I would assume such a marking reflected a positive attribute, but products which require you to buy from a particular supplier have a nice big green tick/check mark, and I’m not sure that is a desirable feature.
There is also a set of pages with pictures of Christmas tree baubles in different colours. These baubles do not seem to be intended to be colour coded to reflect the desirability of the products. Bank savings accounts have a green bauble and credit union savings accounts have an orangey-red one although the descriptions of these products are unsurprisingly very similar. But don’t the colours send an implicit message about the different products, especially given the move to traffic light markings on foods in the UK?
liquidity support for northern rock September 14, 2007
Posted by Bradley in : Uncategorized , comments closedThe UK Treasury, the Bank of England and the Financial Services Authority issued a statement about the liquidity support provided to Northern Rock, the 5th largest mortgage lender in the UK, by the Bank of England. Northern Rock issued its own statement. Depositors panicked and Northern Rock kept branches open late. Northern Rock’s share price fell sharply.
The regulators have emphasised that the problem is one of liquidity rather than of asset quality. Clearly there is not universal confidence in this view. Deposits who deposit up to £35,000 are protected, and would receive most of their money back if they deposit money in a bank that fails. Perhaps UK depositors are thinking of the collapse of the Farepak Christmas savings scheme towards the end of 2006.
Northern Rock used to be a building society, but transformed itself from a mutual business into a for profit enterprise. Northern Rock relies more heavily on capital markets to fund loans than its competitors do, and this contributes to its current liquidity problems: if it can’t raise funds in the market it can’t continue to lend. But although this may be more of an issue for Northern Rock than for other lenders one visible trend over recent years has been an increased reliance by lenders on the financial markets as a source of funds for their lending business.
Willem Buiter critiques the Bank of England’s actions here and here.
student paper topics September 13, 2007
Posted by Bradley in : Uncategorized , comments closedThe American Constitution Society has developed an online resouce, Researchlink, with suggested paper topics in various areas. The resource is designed to further the needs of public interest organizations.
eu opacity September 12, 2007
Posted by Bradley in : Uncategorized , comments closedAfter the previous post suggesting the EU tends to transparency I have to link to this euobserver article reporting journalists’ discomfort with EU opacity.
financial trade associations and transparency September 12, 2007
Posted by Bradley in : Uncategorized , comments closedI have an ongoing research interest in financial trade associations as private rule-making and standard-setting bodies and as lobbyists on financial regulation. ISDA is one of the FTAs I am interested in. One important focus of ISDA’s attention is encouraging jurisdictions around the world to recognise netting. Today I noticed that ISDA made a submission a couple of days ago on Proposals to Achieve Confirmation of “Enforceability of Close-Out Netting in Malaysia under the Malaysia Deposit Insurance Corporation Act 2005” to Perbadanan Insurans Deposit Malaysia, the Malaysian Deposit Insurer. PIDM makes it clear that the consultation follows representations by ISDA, and notes the importance of transparency. However, ISDA’s recent submission to PIDM is not generally available, although it is available to ISDA members. Other ISDA comment letters which are not publicly available are comments to the Reserve Bank of India on Derivatives and on Credit Default Swaps. Comment letters to US and EU bodies on the other hand are publicly available. I am intrigued by this contrast: it’s not clear to me whether ISDA’s approach to publication of its comments is driven by deference to the preferences of the bodies to which it makes submissions or by something else. The SEC and EU bodies such as the Committee of European Banking Supervisors (CEBS) publicise responses to their consultation documents and rule-making proposals, whereas PIDM states:
PIDM will collate all the comments received and publish its responses, including any amendments to the draft Regulations and draft Policy Statement, on its website. The draft Regulations will come into force after the normal legislative process.
wine in the eu September 12, 2007
Posted by Bradley in : Uncategorized , comments closedI’m listening to the EU Parliament’s live streaming of a public hearing on wine policy in the Committee on Agriculture and Rural Development. Wine producer representatives are talking to the committee. I started listening to the English version, but then moved on to the French which somehow seems much more appropriate to discussions of wine (even though the speaker whose intervention I’m currently hearing is from Austria). The Commission proposed reforms of the wine sector in July this year (the proposed new regulation is here). One of the problems the EU is addressing is that Europeans are drinking less wine than they used to do.
The Commission states that the objectives of the reform are to:
– increase the competitiveness of the EU’s wine producers; strengthen the reputation of EU quality wine as the best in the world; recover old markets and win new ones in the EU and worldwide;
– create a wine regime that operates through clear, simple rules — effective rules that balance supply and demand;
– create a wine regime that preserves the best traditions of EU wine production,reinforces the social fabric of many rural areas, and ensures that all production respects the environment.
At the same time the Commission notes that there are issues relating to health, consumer protection, the WTO, and common agricultural policy reform. So it’s business as usual: producer and consumer interests may conflict; culture and economic efficiency may conflict; and the different Member States, wine producers and non-wine producers have their own different views about how to move forward.
cras and other market actors September 11, 2007
Posted by Bradley in : Uncategorized , comments closedCharlie Mccreevy at the European Parliament today:
I also mentioned last week the role of Credit Rating Agencies in this crisis. They have been very slow in downgrading their credit ratings, their methodology has been weak and not very well explained. They also face a potential conflict of interest; on one hand Credit Rating Agencies provide objective ratings to investors of asset backed securities, on the other they provide advice to banks on how they should structure their lending to get the best rating. The role of credit rating agencies needs to be clearer. Because moreover, their ratings are used as a basis for the calculation of banks’ regulatory capital. We need to know what rating agencies do and what they don’t. I am following up these issues with CESR as well as with our international partners. What we need are clear, robust methodological rules and principles, rigorously applied.
Other market players also need to take their responsibilities seriously. And carry out due diligence. Were firms, and the professionals they employ, constantly assessing the quality of the instruments they were buying and selling? I hope that the Boards of all financial firms will examine their actions and draw firm conclusions. We believe that a “light touch”, principle-based regulation is the best approach for the financial sector. But we need to remain vigilant and draw lessons. All parties need to take their responsibility — and take it seriously.
Finally, I would like to respond to the call for enhanced transparency, in a broad sense, which is so often heard in the debate. To improve our understanding of the mechanism at play in structured finance. To be able to better locate risks. To make certain that risks are well controlled.
toy safety issues spread beyond mattel September 10, 2007
Posted by Bradley in : Uncategorized , comments closedBEUC, the European Consumers’ Organisation, expressed concern last week about toy safety issues. The European Parliament also addressed consumer protection issues supporting both better regulation with maximum harmonisation and a procedure for collective redress for consumers. Euractiv describes this as being similar to US-style class actions, although the EP’s socialist group press release contrasts MEP Béatrice Patrie’s proposal with US style class actions:
The thinking behind group actions is not simply to mimic the American “class action”model, whose “aggressive touting of consumers by unscrupulous lawyers and awards of punitive damages against economic operators in no way reflects the legal culture in European countries,”
Meanwhile in the US the Walt Disney Company is to test Disney character toys for lead paint. And retailers, including Wal-Mart and Target, are organising their own safety inspections. And the Second Biennial Sino-U.S. Consumer Product Safety Summit takes place tomorrow, September 11, 2007 in Washington D.C. The notice of the meeting states (in red capital letters):
DUE TO THE OVERWHELMING INTEREST, AND LIMITED SPACE AT THIS EVENT, ONLY THOSE WHO HAVE PRE-REGISTERED WILL BE ADMITTED.
the play's the thing September 10, 2007
Posted by Bradley in : Uncategorized , comments closedGame links at Play this Thing. WOW movies at WarcraftMovies.com. How to make WOW movies via Spiffworld. And the latest Jonathan Coulton WOW movie from Mike Spiff Booth: