As I wind down my stint on the Glom with many thanks to my generous hosts and indulgent audience, I am floored at how far I have strayed from the plan. Two months ago, this was going to be an orderly rollout of brainwaves on somewhat scholarly topics and works in progress. Two weeks ago, this was going to be an interesting way to practice our countercyclical trade. But events intervened with way too many notes for my meagher processing capacity. Paper piles grew, laptop froze, phone, TV and radio talked over one another. I hereby abandon any attempt at coherence with the following loose parting thoughts:
- Following up on David's post, here is today's word from Anne-Marie Slaughter on regulatory networks in the aftermath of the crisis. Slaughter highlights the role of the Basel Committee. At the G-7 press conference this evening, Paulson pointed to the Financial Stability Forum for future regulatory coordination. Note their April and October reports on "Enhancing Market and Institutional Resilience".
- With deposit guarantees and bank nationalizations proliferating, the question of who is responsible for deposits with foreign bank branches is sure to resurface in many ways and many places. Iceland's banks in the U.K. are controversy du jour, but it will not stop there. This old spat between Citi and Wells Fargo over WF's deposits in Citi's Manila branch looks poignant in light of current events: Citibank, N.A. v. Wells Fargo Asia Ltd. (Citibank I) 495 U.S.660 (1990) and Wells Fargo Asia Ltd. v. Citibank (Citibank II) 936 F.2d 723 (1991).
- As to the executive compensation controversy, EU finance ministers have announced principles of their own here (see pp. 13-14; the whole document is a worthwhile window on the EU crisis response). It may look general verging on platitudinous, but French Economy Minister Lagarde suggested this morning that at least some national authorities plan rather substantial measures.
- Those interested in circuit breakers may want to take note of broken circuits in Iceland, Indonesia, Romania, Russia and Ukraine this week. Shutting down stock markets has not done much for confidence so far, but of course who knows how much worse it could have been without, whether this translates to larger markets, etc. Proving negatives is tricky.
- Bloomberg has a readout of the Lehman CDS auction here. It will be fascinating to see how the CDS stock affects what happens in bankruptcy.
- There are people who make a living interpreting G-7 communiques (here is today's). I know not to go there, but refer you to Felix Salmon for the day's accomplishments. David Wessell called it "theater" on Washington Week -- not a compliment in this environment. Let us see what the G-20 do tomorrow.
- Morris Goldstein has a lucid take on regulation in the aftermath. See his recent talk here; video here.
- Further to the mark-to-market controversy, regulatory accounting adventures are crisis perennials. U.S. v. Winstar 518 U.S. 839 (1996) is famous. My favorite example is this 1989 letter from the SEC to the U.S. Treasury, which allowed banks to reduce developing country debt by 30-50% without booking losses. Download sec.Mulford Letter.pdf (reprinted from Hay & Paul, Regulation and Taxation of Commercial Banks during the International Debt Crisis).
Many thanks and all the best.
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