Receiving Wide Coverage ...

Woeful Results in Europe: Considerable attention was paid to Europe's biggest banking companies, which reported sizable quarterly and full-year losses in recent days as they continue to struggle with their exposures to sovereign debt and grapple with the potential fall out from another Greek bail out. Weighed down by exposures to Greek government debt and other impaired assets, Royal Bank of Scotland, Crédit Agricole and Dexia reported quarterly losses. The Financial Times made a video to cover the results. RBS however touted its progress in purging bad assets.

Lloyds Banking Group in the UK also posted a full-year loss (and projected lower income in 2012.

Commerzbank made money in the recent quarter, but the German company also shocked investors with a plan to raise capital by converting a form of hybrid debt into stock. Martin Blessing, Commerzbank's CEO, used his company's annual news conference, to rail against the proposed Greek bailout while vowing to avoid buying any more sovereign debt in Europe's financially stressed countries.

Wall Street Journal

Negative news wasn't limited to Europe. Fitch downgraded three Australian banks — Commonwealth Bank, Westpac, and National Australia Bank — due to higher funding costs. S&P made a similar move in December.

Japan's financial regulator has vowed to scrutinize the operations of all of the nation's investment management firms after halting the operations of little-known AIJ Investment Advisors Co. An investigation found that AIJ, a pension fund manager, had lost billions of dollars in assets it had under management.

There was some positive news in the U.S. as AIG reported a $19.8 billion profit in the fourth quarter, though nearly 90% of that was tied to a tax benefit associated with deferred tax assets.

There was yet another column lamenting the Volcker Rule, but this one takes the position that the rule focuses on the wrong type of trading by ignoring long-term proprietary trading. One possible solution is to leave short-term trading untouched and require banks to prove that any trade held for more than 60-90 days is not proprietary trading.

New York Times

The Commodity Futures Trading Commission on Thursday approved new rules directing the internal business standards for transactions in the derivatives market. Swaps firms now must manage the risks posed by derivatives trading, prevent conflicts of interest and authorize their chief compliance officers to prepare an annual report detailing internal controls.

Simon Johnson, the former chief economist at the IMF, writes that the Fed, while trying to improve transparency, is still far from having the same type of open communication that is seen at the FDIC. In fact, the Fed has drastically reduced its number of public meetings over the past two decades.

 

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