A New Regulatory Model For Retail Finance

Over on The Fine Print, I see that my professional alter ego has updated his post on a proposed new regulatory model for retail finance, in the light of a late night post on the US Crowdfunding Bill. Those posts, and some feverish work of my own on the Book of the Blog, would appear to explain a slight delay on this particular front, which I'm personally assured will be rectified shortly ;-)

Short Churches?

Ever since protesters were forced by police to retreat from the London Stock Exchange to occupy St Paul's Churchyard, I've been fascinated by the effect of the global financial crisis on our Christian institutions.

While the Vatican has seized the opportunity to issue its statement on 'reform to the international financial and monetary systems', the Church of England, of course, was terribly embarrassed to be caught up in it all. Incapable of grasping a real opportunity to shape people's thinking, instead St Paul's initially offered to convene a nice cosy debate. Then the Cathedral's 'canon chancellor' resigned ahead of the Bishop of London's threat of eviction, which was followed shortly after by the resignation of the dean of St Paul's. Finally stirred into action, the Archbishop of Canterbury called for "robust public discussion" about the possibility of a so-called 'Robin Hood tax' on financial transactions.

The Vatican's statement is typically grand, and I've not had the time to consider it all, but here's an extract of some concrete proposals:

"a) taxation measures on financial transactions through fair but modulated rates with charges proportionate to the complexity of the operations, especially those made on the “secondary” market. Such taxation would be very useful in promoting global development and sustainability according to the principles of social justice and solidarity. It could also contribute to the creation of a world reserve fund to support the economies of the countries hit by crisis as well as the recovery of their monetary and financial system;

b) forms of recapitalization of banks with public funds making the support conditional on “virtuous” behaviours aimed at developing the “real economy”;

c) the definition of the domains of ordinary credit and of Investment Banking. This distinction would allow a more effective management of the “shadow markets” which have no controls and limits."

However, I wonder whether our religious institutions could be a bit more active in the reform of the financial system, rather than pontificating from the sidelines? Their wealth and tax-free status has not gone unnoticed, and there's plenty they can do on the investment front. The Church of England's ethical investment policy is here, for example. And it has lent stocks to short sellers. But that's not what I'd call active. 

Having previously suggested that short selling would be a useful regulatory tool, and that we could do with a secular version of the old Devil's Advocate, perhaps these are areas where the churches can help, along with voting at AGMs on executive compensation, for example. In fact, sometimes billed as the "shock troops of the Vatican" or "God's Marines", maybe there's a calling for highly-trained Jesuit priests on the trading desk of an ethical hedge fund, short selling the stocks of companies that the faithful believe are operating unethically. 

I wonder how they would rate Mr Blankfein's efforts?

Image from NJ.com.

No Mandate To Offer Better Public Pensions

Where is Cameron's mandate to offer public sector workers better pensions than the private sector?

Gordo raided the private sector pension pot years ago, as the Tories rightly pointed out in their election campaign. The unions, of course, had no problem with that, since they are the beneficiaries of Labour Party porkbarrelling. And economic crisis has mean that private sector workers have known for the past few years they can never retire.

The public sector needs to understand they can strike all they like. The world has changed.

Referenda seem popular at the moment. Perhaps we should have one to decide this issue?

Of Credit Easing, SMEs And New Regulatory Models

Growth in Lending
Source: Bank of England

Good news that the Treasury is exploring the potential for using the London Stock Exchange's "Order book for Retail Bonds" or "ORB" as a platform for issuing bonds in small and medium sized businesses as a tactic in the government's credit easing strategy. But let's hope this is part of a wider solution that creates a broad 'safe harbour' for a range of instruments and platforms, rather than a nice cosy exclusive for the LSE and its member firms.

Euro Withers While Rome Turns

Giuseppe Lami/Ansa/REUTERS Hat tip: National Post

Too good a headline to miss - Italian politicians turn on each other on the eve of EU summit aimed at resolving the Euro crisis. The Euro slid against the dollar by the end of the day.