All GLG News Analyses Filed Under: Government, Legislation & Politics

Cash will remain king

May 25, 2009

Analysis by: GLG Expert Contributor

Analysis of:Paying With Cash Could Soon Pay Off | online.wsj.com

Changes in the credit card industry will have far reaching implications not only for card issuing banks but also the entire corporate sector.  The entire exercize of working capital management will have to be re-done and liquidity will be given additional prominence.  Purchase managers will come under scrutiny as constantly they will have to answer questions on the rationale of going for credit purchases using company credit cards and how much additional cost it has meant for the company vis-a-vis additional revenue that could have been earned.  Even to provide such data, one has to track down interest rates on bank deposits as well as money market instruments.  Surely, working capital management will become a little more complex.

Duncan MacDonaldConsultantDuncan McDonald

Congress poised to tackle bankcard interchange pricing

May 14, 2009

Analysis of:Paying With Cash Could Soon Pay Off | online.wsj.com

Senator Dubin's bill modestly will open the door to allow merchants to give discounts to consumers who pay in cash instead with credit or debit cards.  As such, it will elevate and thereby politicize another contentious charge by bankcard issuers, the consequence of which could further alienate banks from their customers.  The discount plus the bad politics could further erode bankcard transactions, something the industry cannot afford amidst skyrocking writeoffs and a new Bill oF Rights law that will significantly threaten non-APR fees.

Duncan MacDonaldConsultantDuncan McDonald

Congress might legislate reductions in bankcard fees, costing billions for issuers

May 12, 2009

Analysis of:New Fees for Card Usage Abroad | online.wsj.com

Senator Dodd's bill to reform bankcard practices, if enacted, will subject bankcard non-APR fees to a reasonableness standard.  The idea is to limit the fees to clsoely match the cost incurred by the issuer for the infraction that generates the fee.  For example, if the fee for a late payment is $35 and the actual cost to process it is only $10, the latter is all the issuer will be allowed to collect.  Ditto for foreign transactions, OCL fee, etc.   Because the Dodd bill does not define the new standard, either the FRB or lawsuits would make the determination. 

Better Strengthen Corproate Governance than Combat Symptoms

May 8, 2009

Analysis by: GLG Expert Contributor

Analysis of:Industry attacks draft EU hedge-fund bill | www.euractiv.com

Stress testing and improvement of corporate governance within banks, not rules for counterparty choice should be strengtheneed in order to make them more resilient, in particular also where it has become clear that they do not adequately assess counterparty risk. Hedge funds are generally efficient capital allocation mechanisms because they are unregulated. Regulating them will lead to such capital allocation mechanisms to migrate to unregulated areas, be they geographical (offshores) or legal (private companies). The crisis has been caused by the overflow of liquidity not allowing for adequate risk reward for fixed income investments. Introducing limitations to capital allocation will exacerbate this problem further to the additional liquidity that is in the market supposedly to combat the crisis.

Jose TrevinoPrincipalAmeriCompass

Mexico passes its own stress test

May 7, 2009

Analysis of:Bustle returns to Mexico streets | news.bbc.co.uk

After two weeks of flu stress, Mexico is back on its feet. The economic toll of the damages caused by this threat include an estimated loss of between 0.3 and 0.5% of GDP, based on Asian precedents. The government’s budget deficit could increase by 0.7% of GDP. The pandemic will undoubtedly hit foreign investment as risk premiums for the country have risen. Worldwide worries about the safety of Mexican products, particularly pork meat, will affect the trade balance.  

Peter StylesPrincipal ConsultantStratos European Policy Limited

The European Commission may struggle to reflect national views on financial sector regulation

May 1, 2009

Analysis of:Industry attacks draft EU hedge-fund bill | www.euractiv.com

The largest EU Member States, represented directly in the G7 and/or the G20, have given the European Commission a clear mandate to propose new regulatory controls over alternative investment managers operating inside the EU. Mostly affected will be hedge, private equity and venture capital funds above a threshold size. While the Commission has produced quite clear proposals (albeit criticised from many quarters), once the new European Parliament has been elected and once the Swedish Presidency of the EU Council gets started, we will witness a battle royal among Member State governments to influence the precise legislative outcome  

Another way to promote R&D: More scientific and reasonable regulation

May 1, 2009

Analysis by: GLG Expert Contributor

Analysis of:Obama promises major investment in R&D | finance.yahoo.com

(1) A robust science and technology enterprise is the engine that drives economic recoveries. (2) Many Obama administration senior officials have a dismal history of anti-science, anti-technology ideology; they are ill-equipped to advise and make policy.

European Commission Proposes New Regulations for Hedge Funds and Private Equity

May 1, 2009

Analysis by: GLG Expert Contributor

Analysis of:Industry attacks draft EU hedge-fund bill | www.euractiv.com

Responding to the financial crisis, the European Commission has proposed a regulatory framework that would regulate 'alternative investment funds', such as hedge funds and private equity firms. The proposal would require these investment funds to register and disclose their activities to regulators.  Though the proposal takes a milder approach to regulation than some had expected, the introduction of such a system would nevertheless make the EU the first jurisdiction in the world to establish a systematic framework for regulating such alternative funds.

Incorrect - US Science Education Sole Factor

April 30, 2009

Analysis by: GLG Expert Contributor

Analysis of:Obama promises major investment in R&D | finance.yahoo.com

Beyond increasing knowledge, science contributes to economic growth through technological innovation. While improvement in America’s K-12 science education would be helpful, it is neither necessary nor sufficient for expansion of the nation’s scientific output or of its system of technological innovation.

Private Cops--Public Woes

April 28, 2009

Analysis by: GLG Expert Contributor

Analysis of:Cash Strapped Cities Try Private Guards over Police | online.wsj.com

Cities seeking to save dollars by hiring private police have to pause and consider the legal, operational and emergency implications of this choice. 1-- liability issues will attach not only to use of deadly force but many other areas in domestic violence and ongoing response operations where police discretion and training is often superior to rental cops--after all they are providing public safety services as an approved /contract agent/ of the city\ 2--there are operational instances where surging forces to crime scenes or supplementing existing officer forces could compromise the camraderie and team cohesiveness of response activities and option 3--it is doubtful that rental cops have the training and requisite insights to handle the variety of special operational demands in an emergency situation involving mass casualties or terrorism.  This should be evaluated on a case by case basis.

Previous Page : 3456789101112Next71 to 80 of 363