Latin American Markets Look Promising In 2019 And Beyond


2019 is likely to be a year of volatility in Latin America, but markets look promising for long-term investors. Given banks’ and other financial institutions’ significant exposure to Latin America, analysts and investors will have to be very attentive to external and domestic factors that will influence the performance of Latin American bonds, equities and foreign exchange markets. Read more

Financial Crises: The Enemy Is Amnesia


A very important speech for anyone who wants to conjecture the mood of the Basel Committee is the one delivered by the Secretary General of the Basel Committee. This year’s remarks by Secretary General William Coen, Looking Ahead By Looking Back, did not disappoint. If you want to understand why financial crises should matter to all of us, I would highly recommend you read his remarks in their entirety.  Read more.

Financial Stability Board Report Demonstrates Global Regulatory Reforms Are Far From Complete


The Financial Stability Board, an international body that monitors and makes recommendations about the global financial system, is calling for the Group of 20 (G20) leaders to support implementing post-financial crisis reforms and reinforcing global regulatory reforms.  While the Financial Stability Board’s (FSB) annual report,  Implementation and Effects of the G20 Financial Regulatory Reforms,  points out that bank and derivatives G20 reforms since the 2007-2008 financial crisis “make the financial system more resilient, and thereby reduce the likelihood, severity – and associated public cost – of future crises,” the FSB’s own exhibits show that significant gaps in timely adherence to new capital, liquidity, bank resolution, and derivatives rules remain across the twenty jurisdictions. Precisely because there are significant inconsistencies in the timing and the level of implementation of financial reforms, financial regulators and politicians should not be complacent with them. Read more

Banks Are More Profitable Than Ever But Risks Abound


In a report published on November 15 by Moody’s Investors Services, Moody’s analysts confirmed what I have been suspecting for a few months. U.S. banks’ Common Equity Tier 1 (CET1) has been decreasing. The fact that common equity and retained earnings are decreasing concerns me, because they are what help banks sustain unexpected losses. Read More

Weakening Bank Rules Are Bad For Taxpayers and Investors


Now that the Democrats have won a significant majority in the House, it is important that all legislators remember that they are there to serve their constituents. There are few better ways to serve taxpayers than making sure that the banking system does not implode and cause taxpayer bailouts.  Current attempts to weaken bank regulations and supervision of banks, especially this late in the expansionary part of the credit cycle, poses significant risks to our economy and to Main Street.  Read More.

America’s Largest Three Cities’ Financial Condition Is Scary


Just in time for Halloween and Día de los Muertos (Day of the Dead), municipal finance watchdog, Truth in Accounting (TIA) published its financial analysis on the United States’ top three most populated cities–New York, Los Angeles, and Chicago. Unfortunately, the fiscal condition of these cities is scarier than any costume you have seen this week.  TIA, a non-partisan, not-for-profit municipal finance organization created in 2002, gave New York and Chicago a failing grade of ‘F’ and Los Angeles only a notch above, a ‘D.’  Read more

Leveraged Loan Market Warnings Have Been Ignored For Over Five Years


Former Federal Reserve Chair Janet Yellen expressed her concerns about the significant growth of covenant-lite leveraged loans in an interview with Mr. Sam Fleming of The Financial Times. Yesterday, she stated “I am worried about the systemic risks associated with these loans. There has been a huge deterioration in standards; covenants have been loosened in leveraged lending.”..Read More

U.S. Banks Are Not Reducing Risk Exposures Despite Global Challenges


This year, much attention has rightly been given to political, economic or trade tensions around the globe. In particular, challenges in Argentina, Brazil, China, Mexico, Turkey, and the U.K have dominated the news.  The June 2018 Country Exposure Lending Survey released late last week by the Federal Financial Institutions Examination Council (FFIEC) demonstrates that despite the aforementioned challenges, U.S. banks are not reducing their credit and market risk exposures to those countries significantly. Read more

Internationally Active Banks Are Meeting Initial Basel III Standards


More than two hundred banks around the globe, including one hundred and eleven, large internationally active banks, are making progress in meeting initial minimum Basel III standards. The bank international standards setter, Basel Committee on Banking Supervision, published its Basel III Monitoring Report today as part of its semiannual process to monitor the dynamics and effects on banks of the Basel III capital, liquidity, and leverage reforms. The Basel Committee utilizes data collected by bank supervisors in the 27-member countries to determine the international regulatory banking framework Basel III’s impact on banks.  Read more.

Are Banks Well-Prepared For Operational Risks Posed By Brexit?


The deadline for Great Britain to complete its Brexit negotiations is six months from today.  Unfortunately, I have seen little evidence that internationally active banks in Britain or elsewhere are prepared for the operational risks to which banks are exposed, especially as uncertainty rises about when Brexit negotiations will be completed and how.  Read more

New York Bond Buyers Must Increase Due Diligence Before It’s Too Late

The Bond Buyer

Anyone intending to buy or already holding New York bonds needs to increase due diligence of those issuers’ risks. The recent Internal Revenue Service’s decision to deny the State and Local Tax (SALT) cap work around proposed by elected officials for high property tax municipalities in New York is viewed negatively by Moody’s credit rating agency. Read more

Forty U.S. States Cannot Afford To Pay All Their Bills


Forty states do not have enough money to pay all of their bills, according to quantitative analysis in Financial State of the States, the ninth annual report published this evening by Truth in Accounting (TIA). TIA is a non-partisan, not-for-profit government finances watchdog. To balance the budget, “elected officials have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers.” Read more

Financial Institutions Face Turbulent Journey Ahead

September 23, 2018

The Bank for International (BIS) Settlements Quarterly released today contains important quantitative and qualitative information pointing to a turbulent journey ahead, not only for banks but also for a diverse range of financial institutions and investors globally.  In the near future, the two areas that all should monitor more closely are the continued rise in corporate debt issuance globally, especially those issues that are covenant-lite or in U.S. dollars by emerging market debt issuers, and the intensifying impact of Federal Reserve interest rate rises on all corporate borrowers, but especially those in emerging markets. Read more

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