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January 30, 2012 by John Jay

The European Commission is not happy with the Volcker Rule, a provision found in the Dodd-Frank Act  that seeks to limit banks from taking on proprietary trading risks that can imperil client deposits -- deposits which in the extreme might require further federal bailouts. The overall intent of the rule is to lower the probability of systemic risk so that banks won’t be able, in effect, to take on risky assets with an implicit federal put. But how can one systematically determine when a transaction is proprietary or market-making for the benefit of customers in nature? King Solomon’s dividing-the-baby dilemma seems an easier puzzle to solve.

January 24, 2012 by John Jay

Credit Suisse bankers might not love their employer, but Main Street might. The company has segregated some 800 derivatives risk items to securitize a bond paying 5% to 6.5% to its bankers, in lieu of cash compensation, for at least four years and for as long as nine years. With the U.S. 10-year treasury sitting around 2%, this doesn’t seem like such a bad deal for the bankers.

January 20, 2012 by Julie Conroy

Everyone heading to Wikipedia on January 18 to get the latest factoid on Pippa Middleton had an unpleasant surprise.  In protest of another PIPA, the proposed U.S. Senate legislation known as the Protect IP Act, and the companion bill in the House, the Stop Online Piracy Act (SOPA), Wikipedia and a host of other online sites shut down for 24 hours.  These bills are designed to stem online piracy, and would give the U.S. Justice Department the ability censor foreign sites that harbor pirated material.

January 19, 2012 by Clark Troy

The Economist this week, in an article entitled "Counting the cost of calamities", writes of how the damages caused by natural disasters has risen dramatically over the years as populations in coastal and other disaster-prone regions have grown ever denser as a result of urbanization. This trend was graphically in evidence when Munich Re on January 4 estimated that total insurance industry damage claims for 2011 reached a record U.S. $105 billion, exceeding the record of $101 billion set in 2005. That's a lot of money.

A few pages earlier in the same issue, the Economist had discussed extraordinarily high smog levels in Chinese cities and their impact on public health

January 19, 2012 by Virginie O'Shea

Earlier this week, the Securities and Exchange Commission (SEC) announced that it has fined US$300,000 and issued a cease-and-desist order to UBS Global Asset Management (GAM) for not following fair valuation procedures in three of its mutual funds (check out the full SEC order against UBS on the regulator’s website here).