Reforming Derivatives: Naked Fear

Tim Geithner has reportedly grown so exasperated with uncooperative regulators that he recently blasted them with an expletive-filled rant. Yet the American treasury secretary’s worker ants continue to draft financial reforms as if nothing were amiss. The next and last proposal to be sent to Cong...

By Economist Staff • Aug. 6, 2009

Flexible Spending Account Providers Fighting to Protect Benefits

Payflex Systems, an employee benefits company in Omaha, Neb., never saw much use for hiring a federal lobbyist. That is, until Congress started sniffing around Payflex’s business to help defray the costs of health care reform legislation.“This is all new to us,” Payflex CEO Bob Natt said. The com...

By Roll Call Staff • Aug. 3, 2009

The SEC’s Most Wanted

Last fall the Securities and Exchange Commission promised to scrutinize the regulatory filings of the largest financial institutions. So it’s little wonder that many of the recent comment letters sent by the SEC to corporations focused on the more controversial accounting issues that cropped up d...

By Sarah Johnson • Aug. 3, 2009

Towers of Debt

From a distance Potsdamer Platz looks a bit like its old self. Once the central hub of Berlin, before it was turned into a rubble-strewn no-man’s-land divided by the Wall, it is now surrounded by shiny new towers. Get a little closer, however, and it becomes clear that many buildings are just faç...

By Economist Staff • July 31, 2009

How to Avoid Bank Bailouts

The last time the Obama Administration labeled financial-services firms too big to fail, the result was government handouts to prop up sputtering giants like Bear Stearns, Morgan Stanley, and AIG. The latest proposal from President Obama, which he sent to Congress on Wednesday, takes a different ...

By Marie Leone • July 24, 2009

Five Firms Hold 80% of Derivatives Risk, Fitch Report Finds

Members of Congress probing threats to the global financial system — especially the threat of concentration of risk — will have a lot to ponder in newly mandated disclosures highlighted by a Fitch Ratings report issued last week. While derivatives use among U.S. companies is widespread, an “overw...

By David Katz • July 24, 2009

Securities Lawsuits Plummet in 2009

The number of federal class-action securities lawsuits declined substantially in the first half of this year compared to 2008, a new report says. Given the state of the economy, that may seem odd, but there are some logical explanations for the dearth of lawsuits.According to the Cornerstone Rese...

By David McCann • July 20, 2009

Rules Dig Deep into Financing Receivables

The Financial Accounting Standards Board has issued an ambitious new plan that will dramatically increase the volume and quality of the disclosures creditors will be asked to provide with respect “financing receivables.” The plan takes the form of a rule exposure draft, and according to the propo...

By Robert Willens • July 20, 2009

Clearing the Air on Carbon Disclosures

The sweeping 1,400-page energy bill passed by the House of Representatives in late June, and now on its way to the Senate, contains the makings of a new asset class for affected companies: carbon emissions allowances. Further, the proposed legislation, dubbed the American Clean Energy and Securit...

By Marie Leone • July 8, 2009

As Supply Outpaced Demand, Insurance Costs Slid

With the bad name that risk-taking of all sorts is being strapped with these days, corporations have pulled back on activities that contain the slightest amounts of peril. Following the law of supply and demand, the cost of limiting those risks has plummeted. Thus, even as financial markets churn...

By Kate O'Sullivan • July 7, 2009

The Carbon Effect on Earnings, M&A

The U.S. House of Representatives narrowly passed a new carbon cap and trade bill last week, bringing American businesses one step closer to a mandatory lid on carbon dioxide emissions — the air pollutant cited as being most responsible for global climate change.The legislation, sponsored by Reps...

By Marie Leone • July 6, 2009

Financial Reform: New Foundation, Walls Intact

Even Merton Miller, a Nobel prize-winning economist with a passion for financial arcana, found it “deadly dull.” But if ever there was a week when financial regulation set pulses racing, this was surely it-at least for those too young to remember the great reforms of the Depression.Having spent m...

By Economist Staff • June 19, 2009

Liquidity, Crime Woes Shake Up Chief Risk Officers

Without a doubt, companies have had to change how they view risk over the course of the financial meltdown. Risks that were either ignored or considered a low priority have now risen to the top of their lists of musts-to-avoid.At Constellation Energy Group, which had a cash scare last year, liqui...

By Sarah Johnson • June 5, 2009

The Cost of Climate Change

Seventy-one of the S&P 500 companies could take a 10% hit to their earnings from the cost of emitting greenhouse gases under the so-called cap-and-trade legislation wending its way through Congress.Some of them — Allegheny Energy, American Electric Power, Ameren Corp. — could see their earnin...

By Sarah Johnson • June 2, 2009

Lloyd’s of London: Eggs and Baskets

When American International Group (AIG), the world’s biggest, meanest, and supposedly safest insurer, collapsed into the government’s arms in September 2008, there must have been a few cheers from its rivals. Many hoped to win its customers, particularly large firms paranoid about having high exp...

By Economist Staff • June 1, 2009

Earnings Guidance Takes a Dip

The murkiness of the economic future has discouraged some companies from making earnings forecasts — but they’re still in the minority. In a survey released today by the National Investor Relations Institute, 60% of respondents are giving their shareholders earnings guidance this year, compared t...

By Sarah Johnson • May 18, 2009

Business Sweats on Climate Bill

With climate change legislation heating up, liberal advocates are taking aim at the U.S. Chamber of Commerce, which has been skeptical of recent legislative moves to deal with global warming.A petition organized by MoveOn.org that asks the chamber to stop lobbying against President Barack Obama’s...

By Roll Call Staff • May 14, 2009

Companies Spent 7% Less on Legal Fees in Q1

Companies have sharply cut back their outside legal budgets so far this year, ending the steady growth law firms were experiencing over the past four years. While businesses will spend more of their legal budgets on hiring law firms to help them with regulatory, bankruptcy, securities, and employ...

By Sarah Johnson • May 11, 2009

Rapid Reaction

Like ripping off a plaster instead of slowly prolonging the pain, companies are reporting unaudited results — the good, bad and (often) ugly — faster than ever before. According to a new report by BPM International, a consulting network, Europe’s largest listed companies shaved time off the year-...

By CFO Editorial Staff • May 11, 2009

On Edge

It was a matter of when, not if, as far as Wolfgang Rigler was concerned. Months ago, the veteran finance executive for Mars in central and eastern Europe (CEE) could see there was trouble ahead. “We always knew there was a certain risk in the region,” says Rigler, Mars’s Vienna-based corporate s...

By Janet Kersnar • May 11, 2009

Rude Awakening

What does it take to jolt you into life each morning? A strong cup of coffee? How about an army of competition officials marching into your office without warning?In March, the European Commission led such a dawn raid — “unannounced inspections,” to use the commission’s terminology — on the headq...

By Tim Burke • May 11, 2009

SEC Top Cop Talks Tough

One day after a government report leveled serious criticism at the Securities and Exchange Commission’s policing of financial markets under past-Chairman Christopher Cox, the agency’s new top cop promised a reinvigorated enforcement division.Robert Khuzami, who was appointed director of enforceme...

By Tim Reason • May 7, 2009

GAO: Cox’s SEC Discouraged Corporate Punishment

In a report released publicly today, the Government Accountability Office said that policies put in place during the tenure of former Securities and Exchange Commission Chairman Christopher Cox were thought within the agency to have hampered investigations, discouraged staff from pursuing penalti...

By Tim Reason • May 6, 2009

Swine Flu Hits Financials, Safe Harbor Statements

Swine flu made its first appearance in company financial reports yesterday, one day before the U.S. government reported the first death in the United States resulting from swine flu, a 23-month old boy from Mexico who died in a Houston, Texas hospital.The most prominent company to refer to swine ...

By Tim Reason • April 29, 2009

Rating Agencies: The Wages of Sin

By misreading the risk in mortgage-backed securities and other “structured” products, the rating agencies Standard & Poor’s, Moody’s and Fitch played starring roles in the failure of finance. Their punishment? Oddly, the further entrenchment of their dominance, thanks to the Federal Reserve.T...

By Economist Staff • April 27, 2009