Vietnam has pretty high risk on external financing / FX reserves but pretty low risk on capital mobility
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Thứ Tư, 1 tháng 10, 2008
External Vulnerability Indicator - interesting comparision
Very interesting indicator from Citi's Asia Economic Outlook and Strategy - 26Sep08
Vietnam has pretty high risk on external financing / FX reserves but pretty low risk on capital mobility
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Vietnam has pretty high risk on external financing / FX reserves but pretty low risk on capital mobility
************************************************
SEC Faulted for Missing Red Flags at Bear Stearns
WASHINGTON -- The Securities and Exchange Commission missed "numerous potential red flags" leading up to the shotgun sale of Bear Stearns Cos., and failed to require the investment bank to rein in its risk taking, according to a scathing report from the agency's inspector general.
Inspector General David Kotz said it is "undisputable" that the SEC "failed to carry out its mission in its oversight of Bear Stearns." Bear Stearns, one of the most aggressive investment banks, agreed to be sold to J.P. Morgan Chase & Co. in March after the firm's clients fled and it was running out of cash.
Christopher Cox
In 2006, the report says, the SEC staff "identified precisely the types of risks that evolved into the subprime crisis in the U.S. less than one year later." Yet the agency's staff "did not exert influence over Bear Stearns to use this experience to add a meltdown of the subprime market to its risk scenarios," the report says.
Coming as the independent investment banks that the SEC once oversaw are effectively disappearing, the report amplifies doubts about the agency's future when Congress and the next administration turn to redraw the regulatory landscape in the aftermath of the financial crisis. The findings may also bolster critics who blame the crisis on years of looser regulations that allowed Wall Street firms to take on greater risks without adequate oversight.
"These reports could be nails in the coffin for the agency," said Jacob Frenkel, a former SEC enforcement attorney who is now a lawyer at Shulman Rogers.
The SEC now has no large firms left to oversee, following the sale of Bear Stearns, the bankruptcy of Lehman Brothers Holdings Inc., and the sale of Merrill Lynch & Co. to Bank of America Corp. Morgan Stanley and Goldman Sachs Group Inc. last week filed to become bank holding companies.
SEC Chairman Christopher Cox said Friday the agency will terminate its oversight program of parent companies of independent investment banks, though it will continue to review broker-dealer businesses, including those like Merrill Lynch, that will now be part of bigger banks. The agency also sets disclosure requirements for publicly-traded companies, such as what a company needs to tell investors about executive pay, regulates mutual funds, and writes and enforces securities laws.
'Numerous Shortcomings'
According to the inspector general's report, the SEC "made no efforts" to require Bear Stearns to reduce its debt or raise money, failed to take steps after identifying "numerous shortcomings" in Bear Stearns' risk management of mortgages and also "missed opportunities" to push Bear management to address the problems.
The report also criticizes Bear Stearns management, describing a too-close relationship between traders and risk managers, and a dearth of risk-management skills to match the business.
SEC staff in the division of trading and markets, which is charged with overseeing large and small brokerage firms, vehemently disagreed with the findings, saying in a response that the report "starts from incorrect assumptions and reaches inaccurate, unrealistic, and impracticable conclusions."
In a statement Friday, Mr. Cox said any failures were a result of the SEC not having enough authority to effectively oversee the banks. "That report validates and echoes the concerns I have expressed to Congress," he said.
The SEC was born out of the reaction to the stock market crash of 1929 to provide oversight of brokerage firms and protect investors. Now, as lawmakers take a second look at financial oversight, the power of the SEC could be dispersed to other agencies, such as the Federal Reserve.
The report, along with a second report released Friday about the SEC's oversight of brokerage firms, are "another indictment of failed leadership," said Sen. Charles Grassley (R., Iowa), who in April asked the SEC's inspector general to conduct the review. "We had it at Fannie Mae and Freddie Mac, it was throughout Wall Street, and these reports document the failure of regulators at the SEC to either make its oversight program work or seek authority from Congress so that it could work."
Under Mr. Cox, SEC enforcement cases have stalled, according to current and former SEC employees, in part because the agency's staff has been asked to jump through additional red tape before an enforcement case is finalized.
Last week, Republican Presidential nominee Sen. John McCain called for Mr. Cox's firing and said that if elected he would name New York Attorney General Andrew Cuomo, a Democrat, to the post. Others have criticized the agency's recent move to temporarily halt short selling as confusing and misguided.
Mr. Cox has repeatedly defended his actions and says the agency has been aggressive in enforcing the laws. Earlier this week, he called for regulation of credit default swaps, insurance-like contracts that have been identified as one factor for the current problems at investment banks. He also announced investigations into rumor mongering tied to short selling, or betting stocks will drop in price, and said the agency has more than 50 investigations stemming from the breakdown in high-risk mortgages.
In the second report, the SEC's oversight of brokerage firms was panned. That report found that the SEC conducted in-depth reviews for only six of the 146 brokerage firms registered with the agency. The agency's "failure to carry out the purpose and goals of the Broker-Dealer Risk Assessment program hinders the Commission's ability to foresee or respond to weaknesses in the financial markets."
Reviewing Strategy
In the Bear Stearns report, the inspector general report faulted the SEC for allowing internal auditors at Bear Stearns, not external auditors who would presumably be more objective, to perform "critical" work in reviewing the firm's risk management. The report also criticizes the SEC for not reviewing Bears Stearns's strategy for informing investors about its funding plans following the failure of two of its hedge funds in July 2007.
The SEC took too long, the report says, to review Bear Stearns' 2006 annual report and seek more information from the firm, which the report says would have resulted in Bear disclosing more information about its mortgage portfolio to investors. The SEC staff completed its review after Bear collapsed.
Inspector General David Kotz said it is "undisputable" that the SEC "failed to carry out its mission in its oversight of Bear Stearns." Bear Stearns, one of the most aggressive investment banks, agreed to be sold to J.P. Morgan Chase & Co. in March after the firm's clients fled and it was running out of cash.
Christopher Cox
In 2006, the report says, the SEC staff "identified precisely the types of risks that evolved into the subprime crisis in the U.S. less than one year later." Yet the agency's staff "did not exert influence over Bear Stearns to use this experience to add a meltdown of the subprime market to its risk scenarios," the report says.
Coming as the independent investment banks that the SEC once oversaw are effectively disappearing, the report amplifies doubts about the agency's future when Congress and the next administration turn to redraw the regulatory landscape in the aftermath of the financial crisis. The findings may also bolster critics who blame the crisis on years of looser regulations that allowed Wall Street firms to take on greater risks without adequate oversight.
"These reports could be nails in the coffin for the agency," said Jacob Frenkel, a former SEC enforcement attorney who is now a lawyer at Shulman Rogers.
The SEC now has no large firms left to oversee, following the sale of Bear Stearns, the bankruptcy of Lehman Brothers Holdings Inc., and the sale of Merrill Lynch & Co. to Bank of America Corp. Morgan Stanley and Goldman Sachs Group Inc. last week filed to become bank holding companies.
SEC Chairman Christopher Cox said Friday the agency will terminate its oversight program of parent companies of independent investment banks, though it will continue to review broker-dealer businesses, including those like Merrill Lynch, that will now be part of bigger banks. The agency also sets disclosure requirements for publicly-traded companies, such as what a company needs to tell investors about executive pay, regulates mutual funds, and writes and enforces securities laws.
'Numerous Shortcomings'
According to the inspector general's report, the SEC "made no efforts" to require Bear Stearns to reduce its debt or raise money, failed to take steps after identifying "numerous shortcomings" in Bear Stearns' risk management of mortgages and also "missed opportunities" to push Bear management to address the problems.
The report also criticizes Bear Stearns management, describing a too-close relationship between traders and risk managers, and a dearth of risk-management skills to match the business.
SEC staff in the division of trading and markets, which is charged with overseeing large and small brokerage firms, vehemently disagreed with the findings, saying in a response that the report "starts from incorrect assumptions and reaches inaccurate, unrealistic, and impracticable conclusions."
In a statement Friday, Mr. Cox said any failures were a result of the SEC not having enough authority to effectively oversee the banks. "That report validates and echoes the concerns I have expressed to Congress," he said.
The SEC was born out of the reaction to the stock market crash of 1929 to provide oversight of brokerage firms and protect investors. Now, as lawmakers take a second look at financial oversight, the power of the SEC could be dispersed to other agencies, such as the Federal Reserve.
The report, along with a second report released Friday about the SEC's oversight of brokerage firms, are "another indictment of failed leadership," said Sen. Charles Grassley (R., Iowa), who in April asked the SEC's inspector general to conduct the review. "We had it at Fannie Mae and Freddie Mac, it was throughout Wall Street, and these reports document the failure of regulators at the SEC to either make its oversight program work or seek authority from Congress so that it could work."
Under Mr. Cox, SEC enforcement cases have stalled, according to current and former SEC employees, in part because the agency's staff has been asked to jump through additional red tape before an enforcement case is finalized.
Last week, Republican Presidential nominee Sen. John McCain called for Mr. Cox's firing and said that if elected he would name New York Attorney General Andrew Cuomo, a Democrat, to the post. Others have criticized the agency's recent move to temporarily halt short selling as confusing and misguided.
Mr. Cox has repeatedly defended his actions and says the agency has been aggressive in enforcing the laws. Earlier this week, he called for regulation of credit default swaps, insurance-like contracts that have been identified as one factor for the current problems at investment banks. He also announced investigations into rumor mongering tied to short selling, or betting stocks will drop in price, and said the agency has more than 50 investigations stemming from the breakdown in high-risk mortgages.
In the second report, the SEC's oversight of brokerage firms was panned. That report found that the SEC conducted in-depth reviews for only six of the 146 brokerage firms registered with the agency. The agency's "failure to carry out the purpose and goals of the Broker-Dealer Risk Assessment program hinders the Commission's ability to foresee or respond to weaknesses in the financial markets."
Reviewing Strategy
In the Bear Stearns report, the inspector general report faulted the SEC for allowing internal auditors at Bear Stearns, not external auditors who would presumably be more objective, to perform "critical" work in reviewing the firm's risk management. The report also criticizes the SEC for not reviewing Bears Stearns's strategy for informing investors about its funding plans following the failure of two of its hedge funds in July 2007.
The SEC took too long, the report says, to review Bear Stearns' 2006 annual report and seek more information from the firm, which the report says would have resulted in Bear disclosing more information about its mortgage portfolio to investors. The SEC staff completed its review after Bear collapsed.
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