US regulators yesterday were set to give nervous insurance companies, mutual funds and other big players in financial markets a better idea of whether they will be tapped for the same type of additional government scrutiny facing large US banks.
None of these industries are eager to be on the receiving end of the added attention that comes with being named “systemic” and have spent the past year lobbying to be ignored.
The concern is that new scrutiny will mean new restrictions that could hit firms’ bottom lines.
Yesterday, the US Financial Stability Oversight Council was scheduled to release a new proposal on how it will determine which non-bank firms are important enough to the financial system that they merit greater oversight by the Federal Reserve.
Also yesterday, banking regulators are scheduled to vote on a proposal banning most proprietary trading done by banks, known as the Volcker rule.
Both rules are highly anticipated parts of last year’s Dodd-Frank financial oversight law.
Companies that are tapped for greater Fed supervision will be designated systemically important financial institutions (SIFIs) and will be subject to new capital and liquidity rules.
They will also be required to draft detailed plans on how they could be broken up if the company falters and is seized by the government.
The SIFI rule is in large part a response to the market havoc caused during the 2007 to 2009 financial crisis by American International Group Inc, an insurer not overseen by banking regulators.
Bank holding companies with more than US$50 billion in assets, such as Goldman Sachs and JPMorgan Chase, are automatically subject to the added scrutiny.
In another area of critical importance to major financial players, the board of the Federal Deposit Insurance Corp was to officially release yesterday a proposed version of the Volcker rule.
The rule aims to prevent banks from recklessly engaging in risky trades by prohibiting them from trading for their own profit in securities, derivatives and certain other financial instruments.
The law contains some exemptions to the ban for trades done to make markets for customers and for those used to hedge against certain risks.
How these exemptions are crafted will have a major impact on large banks such as Goldman and Morgan Stanley.
SPEED OF LIGHT: US lawmakers urged the commerce department to examine the national security threats from China’s development of silicon photonics technology US President Joe Biden’s administration on Monday said it is finalizing rules that would limit US investments in artificial intelligence (AI) and other technology sectors in China that could threaten US national security. The rules, which were proposed in June by the US Department of the Treasury, were directed by an executive order signed by Biden in August last year covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The rules are to take effect on Jan. 2 next year and would be overseen by the Treasury’s newly created Office of Global Transactions. The Treasury said the “narrow
SPECULATION: The central bank cut the loan-to-value ratio for mortgages on second homes by 10 percent and denied grace periods to prevent a real-estate bubble The central bank’s board members in September agreed to tighten lending terms to induce a soft landing in the housing market, although some raised doubts that they would achieve the intended effect, the meeting’s minutes released yesterday showed. The central bank on Sept. 18 introduced harsher loan restrictions for mortgages across Taiwan in the hope of curbing housing speculation and hoarding that could create a bubble and threaten the financial system’s stability. Toward the aim, it cut the loan-to-value ratio by 10 percent for second and subsequent home mortgages and denied grace periods for first mortgages if applicants already owned other residential
EXPORT CONTROLS: US lawmakers have grown more concerned that the US Department of Commerce might not be aggressively enforcing its chip restrictions The US on Friday said it imposed a US$500,000 penalty on New York-based GlobalFoundries Inc, the world’s third-largest contract chipmaker, for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯). The US Department of Commerce in a statement said GlobalFoundries sent 74 shipments worth US$17.1 million to SJ Semiconductor Corp (盛合晶微半導體), an affiliate of SMIC, without seeking a license. Both SMIC and SJ Semiconductor were added to the department’s trade restriction Entity List in 2020 over SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing. Exports to firms on the list
TECHNOLOGY EXIT: The selling of Apple stock might be related to the death of Berkshire vice chairman Charlie Munger last year, an analyst said Billionaire Warren Buffett is now sitting on more than US$325 billion in cash after continuing to unload billions of US dollars worth of Apple Inc and Bank of America Corp shares this year and continuing to collect a steady stream of profits from all of Berkshire Hathaway Inc’s assorted businesses without finding any major acquisitions. Berkshire on Saturday said it sold off about 100 million more Apple shares in the third quarter after halving its massive investment in the iPhone maker the previous quarter. The remaining stake of about 300 million shares was valued at US$69.9 billion at the end of
RSS