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U.S. attempt to limit Wall Street bonuses fizzles out quietly

Posted by: Admin | Posted on: July 21st, 2017 | 0 Comments

WASHINGTON (Reuters) – The regulatory agenda released by the Trump administration on Thursday contained a signal that the U.S. government has halted its work on restricting Wall Street executives’ bonuses and other pay incentives.

The 2010 Dodd-Frank Wall Street reform law called for federal banking and securities regulators to create limits on incentive-based compensation at big financial companies and prevent executives from receiving outsized rewards for overly risky gambles.

Last year those regulators, many appointed by former President Barack Obama, a Democrat, rolled out a 500-page rule over many weeks that would require senior executives to return bonuses earned by making decisions that materially hurt their banks.

But in the biannual White House agenda on regulation, the rule was listed under the heading “long-term action,” instead of one denoting regulators were making progress toward a final version. In Washington-speak that meant the rule was dead.

The move followed President Donald Trump’s campaign pledges to lighten federal regulations that hurt liquidity and strangled business.

“They’re not even working on it,” said Lisa Gilbert, who closely tracks Dodd-Frank implementation for the liberal-leaning public interest group Public Citizen.

She added that the rule was labeled “pending” in previous agendas. By law it was supposed to be completed by 2011.

Agencies working on the proposed rule declined to comment.

Regulators neglected last year’s proposal, which addressed many concerns raised about a 2011 draft, even though Obama pushed them to finish it before he left office.

“We kind of knew it was on the back-burner,” said Alexander Monterrubio, director of regulatory affairs for the National Association of Federal Credit Unions trade group. “The unified agenda confirmed that thought.”

Each agency had a different view on regulating incentive-based compensation, making progress difficult, Monterrubio said.

Congress wanted a way to hold top executives accountable after the 2007-09 financial crisis, when some banks experienced major losses partly due to risky decisions made by their leaders. The call for a rule was renewed when regulators rapped Wells Fargo Co. for an incentive method that pushed employees to open thousands of phantom accounts in customers’ names.

But it was politics that likely proved the rule’s downfall.

Agencies give the White House lists of their regulatory priorities, which makes changes based on the president’s goals and then publishes what is called the “unified agenda.”

Monterrubio said of the rule: “It wasn’t going to happen under President Trump.”

Additional reporting by Pete Schroeder; Editing by Andrew Hay

Euro at two-year high, Asian shares barely budge

Posted by: Admin | Posted on: July 21st, 2017 | 0 Comments

TOKYO (Reuters) – The euro held near two-year highs against the dollar on Friday after the head of the European Central Bank said tapering of its stimulus will be on the table this autumn, while a solid global economic outlook kept Asian share prices near decade highs.

While ECB President Mario Draghi set no date for changes to the bond-buying plan, investors took his comments as confirming their expectations that the discussions would lead to monetary tightening next year.

“Although bond markets didn’t take his comments as something particularly new, the currency market liked the fact that Draghi confirmed his stance towards tapering,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

In early Asian trade, the euro stood at $1.1630 EUR=, maintaining its 1 percent gain on Thursday, its biggest since June 27, when Draghi first sparked expectations that the ECB will dial back its bond buying scheme.

Signs of steady global growth, which have prompted the ECB and a couple of other major central banks to signal future tightening since last month, have kept the world’s shares on firm footing.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS, which has gained about 5 percent in the past two weeks, eased 0.1 percent as regional markets opened.

Japan’s Nikkei .N225 dropped 0.3 percent as the yen rose against the dollar.

MSCI’s gauge of stocks across the globe .MIWD00000PUS gained for a 10 straight session on Thursday, its longest such streak since February 2015. It has advanced 3.1 percent during the latest rally.

On Wall Street, the major indexes were almost flat.

Not helping U.S. shares were concerns about U.S. President Donald Trump’s inability to push his through healthcare reform bills, the passage of which will be needed to finance his tax cut plans.

The dollar was also dogged by similar concerns, with its index against a basket of major six currencies .DXY =USD hitting its lowest level since August on Thursday.

Against the yen, the U.S. currency hit a three-week low of 111.48 yen JPY= even after the Bank of Japan Governor Haruhiko Kuroda dropped no hint of following other central banks in curtailing many years of stimulus.

While the euro gained sharply on Draghi’s comments, global bond markets reacted more calmly, partly as he did not give a clear signal on when the ECB will announce its tapering.

The 10-year U.S. Treasuries yield US10YT=RR dropped to 2.238 percent, its lowest in three weeks.

The 10-year German Bund yield DE10YT=TWEB also ended down at 0.531 percent, from close of 0.543 percent the day before.

“I think it is unlikely that Draghi will announce tapering in September. Before the ECB reduced its bond purchase in April, Draghi had asked his staff to look into options in September, and three months later in December he made an announcement,” said Hideki Kishida, a senior economist at Nomura Securities.

“This time he hasn’t even tasked his staff to prepare options,” he added.

In commodities, oil edged up after choppy trading the previous day, as nagging worries about abundant global crude supplies sank prices after an early rally had boosted Brent above $50 per barrel for the first time since June 7.

Traders predicted prices would hold near current levels ahead of Monday’s meeting between key OPEC and non-OPEC producers in St. Petersburg, Russia.

Brent crude futures LCOc1 gained 0.2 percent to $49.39 per barrel.

Editing by Kim Coghill