Finance
Rules imposed after financial crisis have ‘gone too far’, Reeves tells City bankers
Rachel Reeves has told City bankers attending her Mansion House speech that regulations put in place to protect the economy after the global financial crisis had “gone too far”.
Speaking at the glitzy annual gathering in the Square Mile on Thursday, the chancellor called the financial services sector the “crown jewel” of the UK economy.
She argued that tighter rules on banks and investment institutions after the 2007-8 crash had created “a system which sought to eliminate risk-taking”.
“While it was right that successive governments made regulatory changes after the global financial crisis, to ensure that regulation kept pace with the global economy of the time, it is important that we learn the lessons of the past,” Reeves said.
“These changes have resulted in a system which sought to eliminate risk-taking. That has gone too far and, in places, it has had unintended consequences, which we must now address.”
The last Labour government had encouraged the City regulator to take a “light touch” approach to regulating the financial services sector, but was then forced to step in and bail out a string of banks when the US sub-prime mortgage crisis prompted a catastrophic chain reaction.
At the time, regulators were accused of failing to rein in the risky behaviours that had led to the crisis, which plunged the UK into recession.
But Reeves suggested she now believed it was time to loosen some of the constraints that were subsequently imposed on the sector.
“We cannot take the UK’s status as a global financial centre for granted. In a highly competitive world we need to earn that status and we need to work to keep it,” she said.
The chancellor set out a series of changes, some of which were proposed by her immediate predecessor, Jeremy Hunt. These include obliging regulators to take into account growth, as well as financial stability; and replacing the current “certification” regime for investment professionals, with a “more proportionate approach”.
The Financial Conduct Authority has already announced plans to streamline its rulebook for firms to reduce compliance costs, in the hope of promoting growth.
Reeves believes that bolstering private investment is key to improving the UK’s growth rate. She has also announced plans for a mega-merger of public sector pension funds, in the hope of unleashing capital to back UK infrastructure projects.
The chancellor is keen to stress Labour’s pro-business credentials after her first budget, which increased employer national insurance contributions (NICs) from April.
The Bank of England governor, Andrew Bailey, also addressed the Mansion House dinner, stressing the UK’s longstanding support for free trade, as Donald Trump prepares to slap US tariffs on imports.
“I will own up to being an old fashioned free trader at heart. It’s a British characteristic, I like to think. My point is this: amidst the important need to be alert to threats to economic security, let’s please remember the importance of openness,” Bailey said.
Economists have said that if Trump goes ahead with his plan for a universal tariff of 10% on all imports, it could cut the UK’s growth rate next year to a sickly 0.4%.
Finance
Shannon Bernacchia Appointed Interim Finance Director for Regional Schools – Amherst Indy
At a Zoom meeting on Friday, November 22, School Superintendent Dr. E. Xiomara Herman recommended to the Regional School Committee and Union 26 School Committee that Shannon Bernacchia be appointed interim Finance Director for the schools, replacing Doug Slaughter who had served in that position since 2019. Bernacchia has served as Assistant Finance Director under Slaughter. Her appointment was approved unanimously by both school committees.
In recommending Bernacchia for the interim director position, Herman cited her “impressive career, dedication, and accomplishments during this transitional period [to a new administration],” adding, “Since joining our district, she has demonstrated exceptional proficiency in managing complex financial operations, including preparing budgets, overseeing audits, and providing detailed financial reporting to the school committee.”
Bernacchia holds a Bachelors Degree in Business Management from Bay Path University and professional training in school fund accounting. She currently holds an emergency School Business Administrator license valid through 2025 and has completed all requirements for her initial license, except for the 300 hours of mentorship. She anticipates completing that requirement in January, 2025. Former Amherst Regional Public Schools and Town of Amherst Finance Director Sean Mangano is serving as her mentor.
Herman expressed confidence in Bernacchia’s ability to head the district’s financial operations.
In acknowledging her appointment, Bernacchia thanked the school committee members and said that she was excited to work with superintendent who is woman.
Finance
US SEC obtained record financial remedies in fiscal 2024, agency says
NEW YORK (Reuters) -The U.S. Securities and Exchange Commission obtained $8.2 billion in financial remedies, the highest amount in its history, in fiscal 2024, the agency said in a statement on Friday.
The SEC filed 583 enforcement actions in the year that ended in September, down 26% from a year earlier, it said in a statement.
The $8.2 billion in financial remedies included $6.1 billion in disgorgement and prejudgment interest, a record, and $2.1 billion in civil penalties, the second-highest amount on record, according to the SEC’s statement.
Much of the total financial remedies came from a single action: a $4.5 billion settlement with the now-bankrupt crypto firm Terraform Labs, following a unanimous jury verdict against the firm and its founder Do Kwon. The SEC is expected to collect little of that settlement amount because it agreed to be paid only after Terraform satisfies crypto loss claims as part of its bankruptcy wind-down.
The SEC also obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such prohibitions in a decade. Holding individuals accountable for misconduct has been a priority of the agency under Chair Gary Gensler, who is stepping down in January.
“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” Gensler said in a statement about the agency’s 2024 enforcement results.
(Reporting by Chris Prentice; Editing by Leslie Adler and Jonathan Oatis)
Finance
Cop29: $250bn climate finance offer from rich world an insult, critics say
Developing countries have reacted angrily to an offer of $250bn in finance from the rich world – considerably less than they are demanding – to help them tackle the climate crisis.
The offer was contained in the draft text of an agreement published on Friday afternoon at the Cop29 climate summit in Azerbaijan, where talks are likely to carry on past a 6pm deadline.
Juan Carlos Monterrey Gómez, Panama’s climate envoy, told the Guardian: “This is definitely not enough. What we need is at least $5tn a year, but what we have asked for is just $1.3tn. That is 1% of global GDP. That should not be too much when you’re talking about saving the planet we all live on.”
He said $250bn divided among all the developing countries in need amounted to very little. “It comes to nothing when you split it. We have bills in the billions to pay after droughts and flooding. What the heck will $250bn do? It won’t put us on a path to 1.5C. More like 3C.”
According to the new text of a deal, developing countries would receive a total of at least $1.3tn a year in climate finance by 2035, which is in line with the demands most submitted before this two-week conference. That would be made up of the $250bn from developed countries, plus other sources of finance including private investment.
Poor nations wanted much more of the headline finance to come directly from rich countries, preferably in the form of grants rather than loans.
Civil society groups criticised the offer, variously describing it as “a joke”, “an embarrassment”, “an insult”, and the global north “playing poker with people’s lives”.
Mohamed Adow, a co-founder of Power Shift Africa, a thinktank, said: “Our expectations were low, but this is a slap in the face. No developing country will fall for this. It’s not clear what kind of trick the presidency is trying to pull. They’ve already disappointed everyone, but they have now angered and offended the developing world.”
The $250bn figure is significantly lower than the $300bn-a-year offer that some developed countries were mulling at the talks, to the Guardian’s knowledge.
The offer from developed countries, funded from their national budgets and overseas aid, is supposed to form the inner core of a “layered” finance settlement, accompanied by a middle layer of new forms of finance such as new taxes on fossil fuels and high-carbon activities, carbon trading and “innovative” forms of finance; and an outermost layer of investment from the private sector, into projects such as solar and windfarms.
These layers would add up to $1.3tn a year, which is the amount that economists have calculated is needed in external finance for developing countries to tackle the climate crisis. Many activists have demanded more: figures of $5tn or $7tn a year have been put forward by some groups, based on the historical responsibilities of developed countries for causing the climate crisis.
This latest text is the second from an increasingly embattled Cop presidency. Azerbaijan was widely criticised for its first draft on Thursday.
There will now be further negotiations among countries and possibly a new or several new iterations of this draft text.
Avinash Persaud, a former adviser to the Barbados prime minister, Mia Mottley, and now an adviser to the president of the Inter-American Bank, said: “There is no deal to come out of Baku that will not leave a bad taste in everyone’s mouth, but we are within sight of a landing zone for the first time all year.”
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