silly season in parliament? August 8, 2008
Posted by Bradley in : Uncategorized , comments closedThe UK’s Public Administration Select Committee’s Fourteenth Report on how to achieve a balance between the public interests in allowing former ministers and civil servants to publish information relating to their jobs and in keeping some of that information secret has a title with some rather unsavory connotations: Mandarins Unpeeled: Memoirs and Commentary by Former Ministers and Civil Servants.
credit and securitization August 7, 2008
Posted by Bradley in : Uncategorized , comments closedBefore the collapse of the sub-prime lending market the securitization industry tried to fend off a lot of attempts to regulate sub-prime lending by arguing that to do so would deprive consumers of needed credit. The strategy worked reasonably well then so why not keep pushing it? The American Securitization Forum comments on proposals to regulate unfair or deceptive practices with respect to credit cards as follows:
We are concerned, however, that the Proposed Rule too greatly restricts issuers’ ability to re-price interest rates, apply payments, and charge appropriate and disclosed fees. As drafted, the impact of the Proposed Rule’s restrictions on pricing will likely limit the scope and increase the cost of credit products available to consumers because, in part, it will heighten risks and increase costs associated with credit card asset backed securities (“ABS”) for secondary market participants that will necessarily be passed on to consumers. In contrast, a proposal that preserves credit card issuers’ ability to re-price for borrower default risk, maintains their flexibility in applying payments, and protects issuers and investors from litigation risk in connection with existing accounts, will ensure that consumers enjoy continued access to low cost and convenient credit products and services.
Perhaps there’s a simpler solution – if consumers weren’t exploited they wouldn’t feel the need to litigate?
use of 'consequential loss' in consumer contracts unfair in uk August 7, 2008
Posted by Bradley in : Uncategorized , comments closedThe FSA says:
Under the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) firms must ensure that they express any written term of a standard-form consumer contract in plain, intelligible language. In our view, a term which excludes ‘consequential loss’ is not written in plain, intelligible language, as it refers to an expression that has a legal meaning. We do not believe that the average consumer would understand the terminology, and therefore what they are not covered for under the policy.
The FSA that the following formulation is clearer, although it seems to me to involve issues of interpretation of the word “direct”, and therefore to contain some (unavoidable) ambguity:
‘We will only pay costs which are incurred as a direct consequence of the event which led to the claim you are making under this policy’.
fairtrade in the city of london August 6, 2008
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The City of London Fairtrade Steering Group has a really beautiful website. But the latest item on the news and events page is dated March 2008. More form than substance?
opacity in financial regulation: iosco August 6, 2008
Posted by Bradley in : Uncategorized , comments closedIOSCO recently published a document with the title An Overview of the Work of the IOSCO Technical Committee in which it describes ongoing projects. The introduction to the document states that IOSCO plans to engage further with “stakeholders”, which IOSCO describes as “including the financial services community”. The document describes commentators on the prior consultation report as:
coming principally from securities market dealers, financial institutions and exchanges and organizations representing them, and from audit firms and auditor professional bodies. One submission was received from an organization of corporate treasurers.
There isn’t much indication beyond this about who the “stakeholders” are. But:
IOSCO has decided to organize once a year a high-level meeting with Stakeholders on an informal basis to exchange views on topics of mutual interest.
And also, as usual, when IOSCO describes reactions of various stakeholders to its proposals, it doesn’t identify the specific stakeholders, or state which views are held by which stakeholders. Over 3 years ago, the International Bar Association asked for greater transparency at IOSCO. More recently IOSCO actors have claimed a commitment to transparency. But that just doesn’t seem to be what we are getting.
more reflections on knitting and the financial markets August 5, 2008
Posted by Bradley in : Uncategorized , comments closedAs I think about the grandma “sticking to your own knitting” stories, it seems to me that the phrase likely originally includes the idea of minding one’s own business – which is a bit different from the idea of focusing on core strengths. I’m not suggesting at all that knitting is frivolous, and thus has little relationship to the financial markets. Some practitioners take their work very seriously indeed: in fact their attention to detail might be useful in the financial markets (see, e.g., the recently published Recommendations of the SIFMA Credit Rating Agency Task Force, suggesting that CRAs could have been more focused on details and on communicating those details.)
miami welcomes new comparative llm students August 4, 2008
Posted by Bradley in : Uncategorized , comments closedWe are in the process of welcoming the latest set of comparative LLM students to the University of Miami. For me the comparative and international LLM students are among the high points of being at UM, and I really enjoy having them participate in my business associations, international finance and EU classes. This year I’m also looking forward to co-teaching, with Jessica Morris, a symposium on the cross-border practice of law for LLMs only.
knitting and the financial markets August 4, 2008
Posted by Bradley in : Uncategorized , comments closedHow did it come about that focusing on core business activities is described as “sticking to your knitting”? This is what HBOS’ CEO announced last week that the bank would be doing. Larry Elliott in the Guardian says that this is “a phrase that tells you much about the new mood of sobriety in a chastened financial sector.” The term seems to be accepted London market slang, but it’s also used by Michelle Leder at footnoted.org, and is also used in the world of politics (see also this brief critique of buzzwords (including the knitting phrase)).
A slightly different take on the phrase turns up in a sermon:
My grandmother had a saying. When someone was involved in things they shouldn’t be, she’d say, “They should stick to their own knitting.”
Other peoples’ grandmothers seem to have used the same saying. The quote above suggests that the crucial aspect of the phrase may be the focus on one’s own knitting rather than on others’ activities, which is consistent with the use of the phrase. But why has a phrase which includes the word knitting become so commonly used in the context of financial and business activity? Invoking the idea of knitting suggests a return to more traditional and careful practices. It’s sometimes used to mean that people are not being overly ambitious:
he was not going to have any plan, and after the fire it became even more obvious that we ought to be sticking to our knitting and not producing what he would call grandiose plans for the future.
But there’s a particular weirdness about the popularity of the knitting phrase in the context of corporate and financial activity. Knitting is an activity traditionally performed by women (often grandmothers), and many (most/all?) of the business leaders who use the phrase, seemingly unselfconsciously, to describe what they are doing are male.
banking consultation: mainly for experts July 24, 2008
Posted by Bradley in : Uncategorized , comments closedThe consultation on a special resolution regime to deal with the resolution of failing banks states:
The publication of this document is intended to enable all stakeholders with an interest, particularly those with relevant technical expertise and knowledge, to engage with the Authorities on the detail of the proposals, prior to the introduction of the primary legislation later in 2008.
debunking myths July 21, 2008
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I’m not sure whether Governmental campaigns to debunk myths work at all. The UK’s Health and Safety Executive has been running cartoons on a page headlined “Myth of the Month” which try to challenge myths about regulation. The EU has a long list of euromyths from the UK media. And it seems that there has been a similar problem in Romania. But there is a more complex problem than can be addressed by such periodic denials, and it isn’t helped by governmental support of the ideas of better regulation – although this claims to be about ensuring that inappropriate regulation is eliminated/not applied, it often seems to be about the idea of regulation as a problem, rather than as sometimes necessary to protect vulnerable groups.
The House of Commons Regulatory Reform Committee thinks that efforts to date to make regulation better do need more publicity:
We conclude that the BRE has made a significant contribution to improving regulation in a relatively short period and will have a crucial role to play in co-ordinating further reform. It is seen as a positive force in changing regulatory culture, although it could perhaps do more to publicise its role and achievements, which we believe should be more widely recognised.
The BRE now needs to focus on change that builds on reform to make greater impacts on perceptions of regulation. That will need creative and persistent work to fit regulation better to the way in which businesses, consumers and all members of society behave.