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Market Risk - The Future of Carbon Trading in the US
Carbon trading in the U.S. is a lot closer than many realize. Both presidential candidates agree that an emission trading system, also known as cap-and-trade, would be the best way to reduce America’s greenhouse gas emissions. So no matter who wins the election this fall, the next administration can be expected to propose the creation of a system for trading carbon emission allowances. The resulting U.S. carbon market could be up and running by as early as 2012, and annual turnover could be worth between $40 billion and $150 billion in the first year of the program.
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Headline News, Wednesday, August 20, 2008
August 20: Industry Risk - Facts and Fallacies about Commodity Investment Flows
For nearly a decade, institutional investors have been adding a commodity markets exposure to their portfolios as a way to diversify their returns. This trend is now being blamed for the surge in energy prices to record-breaking prices, on the theory that the flow of investment into energy futures has been so large that it has distorted the normal functioning of the market.
August 20: Industry Risk - Next Fed Move More Likely to Be Down, Not Up
Hennessee Group LLC, an adviser to hedge fund investors, expects "inflation will not be as significant as the Fed stated at their last policy meeting two weeks ago", commented Charles Gradante, Co-Founder of the Hennessee Group.
August 20: Industry Risk - SEC Announces Successor to EDGAR Database
Securities and Exchange Commission Chairman Christopher Cox yesterday unveiled the successor to the agency’s 1980s-era EDGAR database, which will give investors far faster and easier access to keyfinancial information about public companies and mutual funds.
August 20: Market Risk - Economic Factors Hurt Consumers’ Ability To Pay
The poor economy and the housing crisis are making it increasingly difficult for credit cardholders and other debtors to fulfill their financial obligations, a trend that will take a toll on the debt recovery industry’s liquidation rates.
August 20: Energy Risk - Should There be Active or Passive Management? (Part VIII)
Active management refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming a benchmark index. Should a vertically integrated electric utility (VIEU) be actively managing the fuel adjustment clause (FAC) functions or should there instead be a random walk down the fuel and power procurement process.
August 19: Commentary - Why Downey Financial is Not IndyMac
Yes, DSL's loan loss rate is nasty with run-rate defaults above 300bp and an MPL calculated in The IRA Bank Monitor over 400bp. Yes, the bank's very ample capital ratios are under some pressure, with total risk-weighted capital down to "only" 14.5% as of June 30, 2008. Tangible equity to tangible assets was 7.5% as of the same date, according to data from the FDIC. But the thing we have stressed with members of the "oh no" club is that whereas thrifts such as Countrywide, IndyMac and even the giant lake trout, Washington Mutual (NYSE:WM), have excessive liquidity risk in their dependence upon brokered funds (as manifest by rising advances from the FHLBs), two key red flags in the IRA world view, DSL does not.
August 19: Operational Risk - Cutting Costs is the Greatest Business Challenge For US Companies
According to a recent international study, the top three business challenges facing companies today are financial pressure to cut costs, competitive threats and rapid growth. In the U.S., 54 percent of participants feel that their greatest business challenge is financial pressure to cut costs due to current U.S. economic conditions. European and Asian companies see challenges in the fiercely competitive job market (43 percent) and high rates of growth (39 percent), respectively.
August 19: Economic Risk - Liquidity Risks Rise for 2010
Fitch Ratings says EMEA corporates generally have comfortable liquidity profiles, aided by undrawn committed bank funding, compared with some Asia-Pacific corporates that rely on short-dated uncommitted bank funding.
August 19: Credit Risk - US CMBS Delinquencies Inch Up Slightly in July
U.S. CMBS delinquencies increased two basis points in July to end the month at 0.43%, according to the latest Fitch Ratings Loan Delinquency Index.
August 19: Industry Risk - SEC Announces Fair Fund Distribution to Harmed Investors in Putnam Mutual Funds
The Securities and Exchange Commission yesterday announced the distribution of nearly $40 million to more than 600,000 investors who were harmed by undisclosed market timing and excessive short-term trading in certain mutual funds managed by Putnam Investment Management, LLC. This is the first in a series of Fair Fund distributions that will ultimately return a total of more than $150 million to more than 1.5 million affected Putnam mutual fund investors.
August 19: Energy Risk - Transmission Line Crosses Hurdle
A major transmission proposal has traversed some rough terrain. The $1.1 billion line that is to stretch 240 miles through the states of Pennsylvania, Virginia and West Virginia has overcome attacks and won over a key regulatory body.
August 18: Industry Risk - SEC Announces $18 Million Fair Fund Distribution to Investors Affected by Undisclosed Market Timing in Janus Mutual Funds
The Securities and Exchange Commission last week distributed more than $18 million to more than 325,000 investors who were affected by undisclosed market timing in certain mutual funds managed by Denver-based Janus Capital Management LLC (JCM).
August 18: Industry Risk - SEC Freezes Funds in Trans-Atlantic "Pump and Dump" Scheme
The Securities and Exchange Commission announced last week that it has obtained an emergency court order freezing the profits from an alleged $13 million international fraud involving a Seattle-area microcap company and a Barcelona stock promoter.
August 18: Market Risk - Wachovia Agrees to Preliminary Auction Rate Securities Settlement That Would Offer Approximately $9 Billion to Investors
The Securities and Exchange Commission's Division of Enforcement last week announced that investors, small businesses, and charities who purchased auction rate securities (ARS) through Wachovia Securities, LLC and Wachovia Capital Markets, LLC (collectively Wachovia) could receive up to $9 billion to fully restore their losses and liquidity through a preliminary settlement that has been reached with Wachovia.
August 18: Energy Risk - The Case for Energy Efficiency Portfolio Standards and Tradable White Certificates
Sometimes a great idea requires great timing to ignite public recognition and action. Energy efficiency has long been a great idea; however, not until the recent convergence of higher sustained energy prices and demand for carbon footprint reduction has the case for widespread adoption of energy efficiency measures become so compelling.
August 18: Energy Risk - Digging Deep for Support
Natural gas may once again become a preferred fuel, but only if the confluence of events surrounding it convinces a majority of U.S. lawmakers to give producers more access to federal areas now forbidden.
August 18: Energy Risk - Retail Marketer Valuation Explained
Despite a stalled electric and gas market restructuring in the United States, UtiliPoint still receives inquiries from investors on how to value energy marketers. Over the past few years, marketer acquisition prices have varied greatly when measured in dollars/customer acquired.
August 15: Economic Risk - CPA Executives See US Economy in Recession
The U.S. economy has already entered a recession and the outlook remains negative according to a majority of chief financial officers and senior-level executive CPAs surveyed by the American Institute of Certified Public Accountants and the University of North Carolina’s Kenan-Flagler Business School.
August 15: Country Risk - UK Economic Growth Likely to Fall Sharply
Economic growth was above trend in 2006 and 2007. In terms of expenditure, the expansion was largely driven by private consumption, on the heels of strong employment, steady real wage and living standards growth, and a surge in immigration. Compressed global credit market spreads, loosening credit conditions and a resulting expansion of household debt, alongside the decade-long housing boom provided additional fuel. Concurrently, investment was boosted by a low cost of capital and high corporate profitability. And notwithstanding favorable export market growth, the current account deficit reached 4¼ percent by 2007, a 3 percentage point worsening since 2003. The real effective exchange rate also appreciated by about 10 percent from 2006 through mid-2007.
August 15: Market Risk - New Research Paper Explores Hedge Fund Performance During Market Downturns
Credit Suisse Index Co. yesterday released a new research piece, Seeking Returns in Turbulent Markets: The Case for Hedge Funds During Market Downturns, which posits that hedge funds in general have customarily exhibited trends of correlation in bull market runs and some de-correlation at market downturns.
August 15: Operational Risk - Analyst Study Reveals 91 Percent of Business Analysts Use Ineffective Tools to Define Requirements
The report found that business analysts are playing a greater role than ever in the success of IT projects. 74% of business analysts have been in the role greater than three years, indicating that the role is maturing and having a greater impact on the alignment of the line of business and the IT organization.
August 15: Credit Risk - Foreclosures Up Eight Percent Nationally In July
Foreclosure filings were reported on 272,171 U.S. properties during July, an 8% increase from June, and a 55% increase from July of 2007 according to RealtyTrac’s July 2008 U.S. Foreclosure Market Report.
August 14: Credit Risk - Survey Finds Nearly Three-Fourths of Americans Want Federal Regulation of the Credit Card Industry
CreditCards.com’s Second Annual Taking Charge survey revealed yesterday that 73 percent of Americans want the government to regulate the credit card industry more closely; and 58 percent of Americans expressed a distrust of credit card companies. Most consumers (78 percent), however, acknowledge that many people make little attempt to understand the credit card information they have and do not read the terms of their credit card offers.
August 14: Operational Risk - CEOs Take “Back-to-Basics” Approach To Cope with Challenging Economy
A renewed focus on a strong balance sheet, strategic acquisitions, operational efficiency, sound management practices, as well as attracting and retaining the best workforce are the key to future growth during turbulent economic times, according to a recent sampling of CEOs from NYSE Euronext-listed companies. The NYSE Euronext 2009 CEO Report, conducted by Opinion Research Corporation, "Managing During Economic Turbulence," underscores that the current US and global economic conditions will separate the best companies from great ones.
August 14: Energy Risk - Oil and Gas Firms May Need to Spend More to Protect Infrastructure
Fitch Ratings says international oil and gas players may be forced into spending additional unforeseen amounts on ensuring that their infrastructure assets are adequately protected as terrorist attacks become bolder, frequent and more severe.
August 14: Industry Risk - FSA Fines Credit Suisse £5.6m For Systems and Controls Failings
Financial Services Authority (FSA) yesterday fined the UK operations of Credit Suisse (the subsidiaries) £5.6 million for breaching FSA Principles 2 and 3 by failing to conduct their business with due skill, care and diligence and failing to organise and control their business effectively.
August 14: Industry Risk - FSA Puts a Stop to Illegal UK Based Share Scheme
The Financial Services Authority (FSA) has been granted a permanent injunction preventing Treadstone Corporation Limited (Treadstone) from illegally promoting and selling shares to UK investors. Thedfred Lemont Shepherd, the sole director and owner of Treadstone, has also agreed not to take part in the same activities.
August 13: Operational Risk - SEC Announces Proposed Plan to Enhance Insider Trading Surveillance and Detection
The Securities and Exchange Commission yesterday announced that it has published for public comment an agreement among the securities self-regulatory organizations (SROs) that is designed to improve detection of insider trading across the equities markets by centralizing surveillance, investigation, and enforcement under NYSE Regulation, Inc. (NYSE Regulation) and the Financial Industry Regulatory Authority, Inc. (FINRA). Currently, each equity exchange is responsible for surveillance of trading on its market and any investigations and enforcement actions involving its members.
August 13: Economic Risk - IMF Clarifies How It Will Monitor Economic Policies
The International Monetary Fund has published new procedures on how it will monitor member countries' economic policies, clarifying in particular how it will discuss with countries exchange rate issues and their impact on the global economy.
August 13: Commentary - How's My Bank or Why One Ranking Just Isn't Enough
In February of 1933, Roy Chapin, trustee of the failed Union Guardian Trust Co, and Arthur Ballantine, Undersecretary of the Treasury, traveled to Detroit to meet with Henry Ford. The great inventor, largely at the behest of his under appreciated son, Edsel, had loaned millions to keep Union Guardian Trust afloat. Ballantine, representing President Herbert Hoover, went to Detroit to convince Ford to make an additional loan or at least put up collateral so that the Reconstruction Finance Corporation could make new loans and thereby avoid disaster.
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Escalating Risk Visibility - The Professional Risk Management View of the Role of the CRO 
Counterparty Risk in Structured Finance Transactions: Swap Criteria 
Risk Manager’s Toolkit - Sure-Fire Spreadsheet Tips and Tricks for the Practicing Risk Manager Enterprise Risk - Fighting Risk Measurement Myopia, Creating a Risk Inventory and Gap Analysis, and Dealing with Obstacles to Enterprise-Wide Risk Management Risk Reporting - Creating Incentives for Proper Data and Risk Reporting and Disclosure 
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Basel II: The 'Bottom-line' Impact on Securitization Markets Fitch Ratings 1991-2004 Structured Finance Transition Study Credit Default Swap Options: What They Are, Who Is Using Them, and Why Sarbanes-Oxley Section 404: Fitch's Approach to Evaluating Management and Auditor Assessments of Internal Controls High Yield Credit Default Swaps - Restructuring as a Credit Event Hedge Accounting and Derivatives Study for Corporates Counterparty Risk in Structured Finance Transactions: Swap Criteria IFRS and International Accounting Convergence: Revolution or Evolution? Accounting for Stock Options, Should Bondholders Care? |
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The Great Depression As A Credit Boom Gone Wrong Currency Crises And The Informational Role Of Interest Rates Principles For The Management And Supervision Of Interest Rate Risk Markets for Bank Subordinated Debt and Equity in Basel Committee Member Countries The Role of Central Bank Money In Payment Systems Risk Management Principles For Electronic Banking Overview of The New Basel Capital Accord |
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