Streetwise Professor

June 8, 2011

Timmy! Winning Friends and Influencing People

Filed under: Clearing,Derivatives,Financial crisis,Politics,Regulation — The Professor @ 1:29 pm

Timmy!, the addressee in a WaPo love letter (h/t R) isn’t feeling the love from outside the 202.  Timmy! lectured—or should I say hectored—the world on derivatives, saying, for all intents and purposes, our way or the highway.

To say this went over like the proverbial, uhm, lead balloon would be the understatement of the year.  The Singapore Monetary Authority and the Hong Kong Monetary authority took umbrage at Geithner’s implication that they were lax regulators.  The CEO of the Futures and Options Association, Anthony Belchambers, was quite biting in his reply:

US Secretary Geithner’s comments do not appear to take any account of the fact that the SEC, arguably, was an equally tragic failure – and by a regulatory authority that was notably “heavy touch” but also in some areas “no touch”!

Ouch!  Can you say “Bernie Madoff”?  I knew you could.

Martin Wheatley, who is leaving his position as the head regulator in Hong Kong to take up the leadership of the UK’s Consumer Protection and Markets Authority (eat your heart out, Elizabeth Warren!) was equally scathing.  More so, actually:

US Treasury secretary Tim Geithner was talking “nonsense” when he warned that the world must follow America’s lead on financial regulation, according to a senior European regulator and outgoing head of Hong Kong’s market watchdog.

“To suggest that the US sets a gold standard that other markets should follow is nonsense,” said Mr Wheatley, speaking on the last day of his six-year stint as head of Hong Kong’s Securities and Futures Commission.

That’s gonna leave a mark.

I guess this is what they call smart financial diplomacy.  It’s having about the same effect as the administration’s “smart diplomacy” more generally.  Which is not a good thing.  International coordination on derivatives and other aspects of financial regulation, but US browbeating will not facilitate this coordination.  The opposite effect is more likely, and all of the WaPo puff pieces in the world won’t make any difference.

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1 Comment »

  1. […] When people think of corporate strategy, they often neglect to think of corporate finance as a strategic weapon. Same with diplomacy. […]

    Pingback by Breakfast Links | Points and Figures — June 9, 2011 @ 4:53 am

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