(The following column by Somasekhar Sundaresan appeared in today’s Business Standard) Newspapers have recently reported that a proposal has been mooted in government to convert the Securities Appellate Tribunal (SAT) into a “Financial Services Appellate Tribunal” to hear grievances against orders passed by various sub-sectoral regulators. Currently, the SAT hears appeals only against orders...
Budget 2009: Key Features and Some Thoughts
India’s Finance Minister, Mr. Pranab Mukherjee, presented the Government’s annual Budget in Parliament yesterday. While commentators brand it a mixed bag, the stock markets do not seem to have received the Budget favourably as the stock indices experienced their largest Budget-day fall in history. The purpose of this post is to highlight some of the key items in the Budget that impact the...
A Resurgence of Bank Nationalisations
An offshoot of the global financial crisis has been the significant changes in economic policies in the developed world. The recent phenomenon relates to increasing calls from leading economists to nationalise troubled banks, particularly in the U.S. The concept of nationalisation was previously associated with the so-called ‘socialist’ economies, but is now becoming closer to reality even with...
Lessons for Financial Sector Regulation
Lloyd Blankfein, the chief executive of Goldman Sachs, offers his explanation of the things that went wrong in the financial services sector which resulted in contagion and the global financial crisis. In his column in the Financial Times, Blankfein outlines the failings and the lessons from the crisis: – risk management should not be predicated on historic data;– outsourcing of risk...
Dealing with Duopoly in a Regulated Sector
A recent episode involving determination of fees by commodity exchanges has sparked off an intense debate on the role of a regulator in dealing with a duopoly situation. The regulator here is the Forward Markets Commission (FMC) and the players the two commodities exchanges, NCDEX and MCX. The trigger is a decision by the FMC to prevent NCDEX from dropping its prices. Ajay Shah has a column in...
Rating the Raters
Even since the subprime crisis erupted last year, there has been an extensive debate about the role of credit rating agencies in exacerbating the crisis. Questions have been raised whether the rating agencies ought to have raised the red flag much earlier than they actually did, thereby protecting the interests of investors who placed reliance on their reports. The debate over rating agencies...
FII Participation in Indian Depository Receipts
A recent post on this blog examined changes to the SEBI DIP Guidelines made with a view to promoting qualified institutional placements [“QIPs”], as a measure to address domestic economic concerns, by enabling greater access to funds. While this shortage continues to be a cause for concern for domestic companies, given the interest rate hikes and the global financial crisis; the Finance Ministry...
Nationalisation of Large Corporations
An interesting column in the Economic Times by Swaminathan S. Anklesaria Aiyar looks at the biggest government takeovers in history: “Socialists, like Hugo Chavez in Venezuela or Indira Gandhi in India, are famous for nationalising the biggest corporations. But the US government has taken over three of its biggest corporations within two weeks. Has the US turned socialist? American right-wingers...
The Feasibility of a Toxic Relief Fund
The new proposal to deal with the financial crisis involves the U.S. Government setting up a special fund to acquire toxic or illiquid financial assets on bank balance sheets. The Times Online has a report: “Henry Paulson, the US Treasury Secretary, hopes to nationalise the global risks associated with America’s sub-prime mortgages by setting up a toxic relief fund to buy up the mortgage assets...
Sarbanex-Oxley & the Subprime Crisis
One of our readers points to this column Did Sarbanes-Oxley miss a trick during subprime? in the Mint, where the author observes that the subprime crisis occurred despite the existence of stringent legislation such as the Sarbanes-Oxley Act (SOX). However, unlike past corporate governance failures such as Enron & WorldCom (that that triggered the passage of SOX), there has been no allegations...
Recent Comments