It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
WASHINGTON (Dow Jones)--The Securities and Exchange Commission's civil fraud charges against Goldman Sachs Group Inc. (GS) highlight the need for greater transparency in derivatives markets, a senior official of the International Monetary Fund said Tuesday.
Jose Vinals, director of the IMF's monetary and capital markets department, declined to comment on the specific case while it's still in progress.
But he said the situation shows "it's very important that an effort is made to enhance the transparency in the derivatives market."
He also pointed to a proposal in the semi-annual Global Financial Stability Report released Tuesday that would require dealer banks to clear swap trades through clearinghouses, which guarantees trades for both parties in case one side defaults.
"It would be very important that these derivatives are cleared through central counterparties and that many of these derivatives contracts are adequately collateralized, precisely to reduce risks," said Vinals at a press conference to discuss the report.
Fuld to come out fighting at Lehman congressional hearing
By Tom Braithwaite in Washington
Published: April 20 2010 03:00 | Last updated: April 20 2010 03:00
Dick Fuld, the former chief of Lehman Brothers, will argue today that a court-appointed examiner "distorted" facts about the bank's collapse at a congressional hearing that also puts the spotlight on the US Securities and Exchange Commission.
The House financial services committee will also hear from Ben Bernanke, chairman of the Federal Reserve, Mary Schapiro, chairman of the SEC, and Anton Valukas, the court-appointed examiner, as lawmakers look at Lehman's collapse in 2008.
In a report published last month, Mr Valukas found that Lehman broke its own risk limits and used an accounting technique called Repo 105 to improve its balance sheet by $50bn (£33bn) by classing repurchase agreements as outright asset sales.
The prepared testimony of Mr Valukas is scathing about the SEC, which was pilloried for failing to spot the Madoff fraud and Lehman's use of Repo 105 before earning plaudits last week for its fraud action against Goldman Sachs.
"It is one thing for Lehman to have exercised the business judgment, although in retrospect clearly bad judgment, to forge ahead and take on excessive risk," said Mr Valukas. "But it was quite another for the supposed regulator . . . to stand by idly and simply acquiesce to management's decision."
Time is running out for governments to overhaul regulation of global banks that have become bigger and more powerful since the start of the financial meltdown three years ago, the International Monetary Fund warned today.
In its half-yearly health check on the financial sector, the Washington-based fund said there was an urgent need for international co-operation to tackle the systemic risks posed by banks deemed "too big to fail".
"The future financial regulatory reform agenda is still a work in progress, but will need to move forward with at least the main ingredients soon", the IMF said in its Global Financial Stability Review. "The window of opportunity for dealing with too-important-to-fail institutions may be closing and should not be squandered, all the more so because some of these institutions have become bigger and more dominant than before the crisis erupted.
"Policymakers need to give serious thought about what makes these institutions systemically important and how risks to the financial system can be mitigated."
There are "serious talks" back underway between senators in both parties on Wall Street reform, Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday.
McConnell said that the letter all 41 GOP senators had signed pledging a filibuster of financial regulatory reform legislation had forced Democrats back to the negotiating table to try to strike a deal.
"What happened as a result of the 41 letter is that serious talks have resumed," McConnell said. "We had a chance to get a report from Senator Shelby and others at lunch today, and I'm convinced now that there is a new element of seriousness attached to this, rather than just trying to score political points."
McConnell made those remarks, though, shortly before Senate Banking Committee Chairman Chris Dodd (D-Conn.) took to the Senate floor to castigate the GOP for its potential blocking of a motion to proceed on the legislation, which Dodd had authored.
But the partisan barbs were not gone entirely fromthehill.com... McConnell's post-luncheon remarks, in which he said it was a "fact" that the White House pulled Dodd and other Democrats away from negotiations on a bipartisan bill.
Dodd has emphatically denied that charge.