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Will Mark Carney Cast a Blinding Light on London's Shadowy Financial Sector?

Receiving Wide Coverage ...

There's a New Bobbie, Er, Mountie in Town: The surprise announcement that Mark Carney, Canada's central banker, will cross the pond to head the Bank of England could be viewed as a shot across the bow for global banks operating in the London regulatory haven. Granted, Carney is a Goldman Sachs alumnus (or "a member of the Government Sachs Club," as a Times headline put it). But he also has a history of ruffling bankers' feathers, and not just Jamie Dimon's. An economist tells the FT, "Carney is known to be fairly tough with commercial banks in Canada. His public comments suggest he is no great fan of 'light-touch' regulation. He also appears to have little time for arguments that higher bank capital buffers are preventing economies from growing." Beyond simple questions of tough or soft, the Journal notes that Carney "has been a vocal advocate of coordinating bank supervision between countries. That has not always been the philosophy among British regulators, who sometimes have embraced a go-it-alone strategy." Though he will again be playing the role of central banker, Carney's dealings with bankers will go well beyond monetary policy, since the BoE is set to take over much of the financial regulation done by the soon-to-be-scrapped Financial Services Authority. According to the FT's "Lombard" column, Carney "is credited with helping steer his country clear of the banking crisis. … And as chairman of the Financial Stability Board, the Canadian has an appreciation of the risks posed by shadow banking." That will surely come into play when he's policing the City, the shadowy home of the London Whale and AIG-FP. Is it churlish of us to note that Carney's wife, a British environmental activist, has called global financial institutions "rotten or inadequate" and expressed admiration for the Occupy movement, according to the Telegraph? The Economist goes as far as to speculate that before his five-year term at the BoE expires Carney might be lured back to this side of the Atlantic … to succeed Ben Bernanke at the Fed.

…While a Sherriff Hangs Up Her Badge: Mary Schapiro announced she will step down as SEC chairman next month, triggering speculation about who would succeed her. Treasury official Mary Miller, veteran financial executive Sallie Krawcheck and SEC enforcement head Robert Khuzami are among the names being bandied about. The Times gives a mixed assessment of Schapiro's tenure at the SEC. And a Journal story about the deliberations among the jurors who acquitted the managers of the collapsed Reserve Primary fund of fraud charges underscores the agency's struggles to prosecute individuals in cases related to the financial crisis. "We didn't want to put any individual at blame when there wasn't enough evidence to prove that specific person was solely responsible," a juror tells the paper.

Wall Street Journal

An editorial chides community bankers for lobbying to extend the TAG program. "Calls for regulatory relief are undercut when small bankers are simultaneously requesting even more taxpayer backing. The desire to embrace the freedom to succeed without accepting the freedom to fail has been all too common in recent years at banks of every size."

A letter to the editor rebuts a recent op-ed by Eugene Ludwig and Paul Volcker in which the regulatory veterans argued that banks should be allowed to build loan-loss reserves more conservatively than under current accounting rules.

New York Times

"Mortgage Interest Deduction, Once a Sacred Cow, Is Under Scrutiny." We'd say "wow," but we feel like we've heard this before.

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