UK's Darling pushes "global rulebook" for banks

U.K. Chancellor of the Exchequer Alistair Darling, following a meeting with U.S. Treasury Secretary Timothy Geithner, said the world needs a global rulebook for banks to prevent future crises. ‘‘There is recognition that because banking is global it needs to be dealt with in the global arena. There is also recognition that many issues need international cooperation.’’

Darling said he expects ‘‘in September that progress will be made’’ when leaders of the Group of 20 nations meet in Pittsburg. He said finance ministers of the G-20 will meet in London on Sept. 4 and Sept. 5.

Bank of "America First"

One of the news items that caught the attention of GlobalRiskJobs this weekend was a story in the FT about Bank of America pulling its job offers to foreign MBA students. In a field like risk management this is big news given the high number of professionals who have trained in advanced degree programs overseas. The Troubled Asset Relief Program prevents financial institutions that have received federal bailout money from applying for H1-B visas for highly skilled immigrants if they have recently made US workers redundant. Given that just about all of the big banks have already cut loose thousands of workers, it would appear this provision will have far-reaching impact in the coming months. Is this a "Buy American" initiative in an industry that, unlike manufacturing, hasn't seen much of that sentiment? Could this be dangerous for certain highly-skilled math and finance fields where the best and most qualified professionals are needed now more than ever? I guess it's symbolic that the Bank of America was the first to announce details of the pullback, but expect more news of this type to follow. And a story in today's Washington Post examines more evidence of budding jingoism in the midst of the global financial crisis. A US House panel is criticizing the Obama administration for not policing deals where TARP banks lent money overseas. The populist sentiment seems to be that banks getting federal funds should deploy those funds to help the domestic economy.

The links:

• Is Paul Volcker urging a return to Glass Steagall? It sure seemed like the Former Fed Chairman wanted to turn back the regulatory clock in a speech last week. BreakingViews' Hugo Dixon doesn't agree. He believes that improving risk management and tightening regulation across the financial industry is a better approach.
  
• BofA accused of obstructing Cuomo bonus probe. Yes, the comp saga continues...
  
• Robert Schiller examines the role of government in this FT piece about controlling the "animal spirits".
  
• The Nationalization debate continues...Alan Blinder gives his take in the NYT...BofA's Ken Lewis talks his own book in the WSJ as he seeks to set the record straight...Goldman's Blankfein thinks it's a bad idea as well...Senators McCain and Shelby preached tough love for the banks.
• Geithner needs help! The NYT reports that politics, among other things, has slowed the building of a team to deal with all the aspects of the crisis.
• And of course, the AIG firestorm continues. The WSJ reported this weekend who some of the major counterparties were that received federal money via AIG. BofA, Goldman, Deutsche, Merrill, Calyon, Barclays...
  

Big Banks to be "Stress Tested"

More news on the regulation front. The Wall Street Journal is reporting that many banks will be subject to rigorous examinations to see if they are healthy enough to lend before they receive additional federal bailout funds. Federal regulators will likely require large banks to undergo a stress test to determine just how bad things could get in the worst case. The new oversight could take a step toward addressing longstanding disagreements among regulators about the health and viability of scores of institutions. Setting up a stress test could create a more objective set of standards and might also reveal the depths of the industry's problems. Keep in mind the theme that GlobalRiskJobs has been repeating for quite some time: regulation and reporting requirements will just keep getting stronger.

• Geithner will unveil the Obama Adminstration's bank rescue plan later today. He is expected to present a multi-faceted program to encourage financial institutions to lend again. A housing plan centering on mortgage modification and a "bad bank" public-private partnership will also be key areas. Bloomberg has a preview of the 11 am announcement.
  
• Nouriel Roubini had some strong words about regulation in the FT. He states that risk models fail because business lacks discipline to heed them, and thinks Basel II has failed even before being fully implemented.
  
• Also in WSJ, news of an emerging plan calling for issuers of pools of mortages to retain a slice of the securitization in order to keep some "skin in the game". Participants in the annual American Securitization Forum this week in Las Vegas are discussing different ways to buttress the market.
• The new SEC Chief pledged to crack down on fraud as she announced big changes at the commission. The WSJ thinks her central point has got it backward.
  
• Japanese corporate bond risk has risen to all time highs resulting from the pace of economic decline.
• We mentioned credit cards becoming a problem last week. NYT reports that private label cards are already showing signs of strain.
• Chris Hughes has some notes on the global nature of this credit crisis.
• DealBook reports that 8 big bank chief execs will descend on the Capitol via public transportation in order to get their public whipping from Barney Frank and the House Financial Services Committee.