national city bank

Sources: FT: Derivatives Reform Will Not Prevent Next AIG ; Lawmakers Warning on Derivatives Rules ; Banks Anxious Over Fed Regulations A group of New York lawmakers recently sent a letter to US financial regulators including the Federal Reserve and the Commodity Futures Trading Commission, warning that a newly proposed rule on derivatives under the Dodd-Frank Act would hurt the competitiveness of the US financial institutions. The lawmakers also wrote in a letter that the rule would be “inconsistent with Congressional intent.” It is a margin rule that the lawmakers make an issue of, which applies to US banks as well as their foreign subsidiaries located outside the US. Specifically, the rule requires parties to some derivatives transactions to post cash or securities as collateral or “margin” in order to assure their obligations. Under this rule, foreign subsidiaries also have to collect collateral from their foreign clients. Unless foreign regulators do not adopt a similar approach, ...

Sources: Economist: Cutting It Fine Bloomberg: European Bank Funding Threatened as Basel III Meets Solvency II FT: Banks Endorse Option of Creditor ‘Bail-in’ ; Brussels to Target Bondholders on Bail-outs In many European countries, the maturities of bank debt have shortened dramatically in 2011 compared to 2006, according to data provided by Dealogic. In particular, in countries having sovereign-debt problems such as Greece and Portugal, the maturities of bank debt have fallen more sharply. In other countries such as Spain and Italy, banks also face funding difficulties and have been issuing more short-term bonds or paying higher yields. In the case of Italy, banks pay higher yields on their bonds by 1-1.5 percentage points than banks in France and Germany. Having more short-term funding is worrying because it makes banks vulnerable to a sudden liquidity dry-up in short-term funding markets as it happened during the recent global financial crisis. On the other hand, banks in some count...

Sources: WSJ: SEC Aims to Tighten the Rules on Raters Bloomberg: SEC Credit-Rating Rules, 401(k) Bill, WTO’s Airbus Aid Ruling: Compliance SEC: SEC Proposes Rules to Increase Transparency and Improve Integrity of Credit Ratings On Wednesday, the Securities and Exchange Commission (SEC) proposed more restrictive rules on credit rating agencies (CRAs). CRAs rate the “creditworthiness” of debts as well as financial institutions holding debts. During the financial crisis, CRAs were criticized for contributing to the housing bubble by providing inaccurate and inflated ratings for mortgage-backed securities. Congress, in passing the Dodd-Frank Wall Street Reform and Consumer Protection Act, intended to correct such problems, and the SEC’s new rules would implement relevant provisions of the Act. The SEC’s proposed rules aim to “strengthen the integrity and improve the transparency of credit ratings,” said SEC Chairman Mary L. Schapiro. Specifically, new rules would require CRAs to disclose m...