As Europe\'s lawmakers scrutinise rule changes in key areas of banking, the focus is on structured products and supervision By Melvyn Westlake

BRUSSELS – The European Commission’s proposals to regulate the credit rating industry in the EU has produced a strongly negative response from large sections of the financial services industry and some governments. Responses to two consultation papers have revealed strong concerns that the proposed rules are not consistent with those in other parts of the world, notably the US, and that they do not adequately protect against political interference in the content of ratings.

WASHINGTON – A call for the creation of global regulatory coordinating body has come from one of the most influential international banking industry associations. It is contained in a letter to the 24 finance ministers from developed and developing countries on the International Monetary and Financial Committee (IMFC), a powerful body that provides policy advice to the International Monetary Fund (IMF), the Washington-based multilateral agency.

NEW YORK – Credit derivative traders in the US have been stunned by a double threat to regulate their market. First, Christopher Cox, head of America’s Securities and Exchange Commission, the leading securities watchdog, called for regulation of credit default swaps (CDS) in testimony to the Senate Banking Committee in late September.

LONDON – US moves to reform the country’s controversial collateral rules applying to non-US reinsurers were welcomed in the European insurance industry. The issue has caused rows between America and Europe, where reinsurers resent a current requirement to lodge 100% collateral against business they do in the US. In late September, the National Association of Insurance Commissioners (NAIC), the organisation that represents America’s state insurance regulators, said it had advanced for full adoption its Reinsurance Regulatory Modernisation Framework Proposal.

WASHINGTON – Most big US banks adopting the controversial Basel II capital rules have pushed the start of their required one-year test of the new standards as far back as 2010 amid the uncertainties of the global financial crisis, according to US banking industry sources.

WASHINGTON – The handling of the problems encountered by stricken US insurance giant American International Group (AIG) shows the strength and effectiveness of state regulation, not the opposite, New York state insurance superintendent Eric Dinallo told US lawmakers in early October.

BRUSSELS – Insurance industry representatives welcomed the first gleanings from a key test of the proposed Solvency II framework that’s intended to make Europe’s 5,000 insurers and reinsurers safer and sounder.

WASHINGTON – The roles of central banks, regulators, supervisors and governments in maintaining financial stability needs clarifying in the wake of the global financial crisis, according to the International Monetary Fund. It’s important that decisions to tackle the turmoil are not hampered by lack of clarity over the roles and responsibilities of various authorities, the IMF says in its latest financial stability report issued in early October. The crisis has seen governments in the US and Europe move to rescue failing banks with taxpayer-funded bailouts, or to assist in the acquisition of weak institutions by stronger ones.

Report from former Fed chiefs and private sector experts sets out options for countries needing to revamp supervision