The Federal Financial Forum

From: Financial Times

By Simon Rabinovitch in Beijing and Paul J Davies in Hong Kong

The Big Four auditors have been caught in the crossfire of a US-China  regulatory dispute, but the biggest casualty could be Chinese companies listed  in the US.

The US  Securities and Exchange Commission on Monday accused the Chinese affiliates  of the Big Four – Deloitte, Ernst & Young, KPMG and PwC – plus one other  firm, BDO, of breaking securities laws after they refused to produce paperwork  related to investigations into accounting fraud at nine Chinese companies.

From: Time

By Christopher Matthews

SEC Chairman Mary Schapiro announced  yesterday that she would be stepping down from her role in December, marking  the end of one of the most eventful four-year periods in the  SEC’s history.

When she assumed the Chairmanship of the SEC in January of 2009, the  reputation of America’s financial regulatory apparatus was at its  nadir. For more than a decade, regulators had failed to react to a growing  real estate bubble, the bursting of which precipitated the worst financial  crisis the country had seen in generations. Then, in December 2008, Bernie  Madoff was arrested and charged with criminal securities fraud related to a  decades-old ponzi scheme that he had operated right under the noses of the SEC,  the most powerful and prominent securities regulator in the country. Meanwhile,  large financial institutions were being bailed out with taxpayer money because  the regulatory system had failed to require those firms to hold enough rainy-day  capital.

From: WSJ/Blogs

By C.M. Matthews

David Cohen, undersecretary for terrorism and financial intelligence, announced last week a  federal task force of regulators and enforcement agencies has been created to “look under the hood and take stock” of the entire U.S. anti-money laundering regime. According to a Treasury Department spokesman, in the next year “we expect the task force to examine the overall AML regulatory, compliance and enforcement effort, and to develop ideas on how those efforts can even more effectively combat money laundering and other forms of financial crime.”

From: Reuters

Emily Stephenson

U.S. banking regulators do not expect proposed rules requiring financial institutions to hold more capital to take effect on January 1, as regulators work through a flood of industry comments on the proposals.

Regulators have received more than 2,000 comment letters since the rules were proposed in June to implement the international agreement on bank capital known as Basel III.

The agreement is considered one of the most critical reform efforts to make sure the global banking system is more resilient in the aftermath of the 2007-2009 financial crisis.

MEXICO CITY/LONDON, Nov 5 (Reuters) – International  watchdogs, working to tighten-up global regulation after the  financial crisis, are moving ahead with plans to extend their  reach to “shadow banks” such as money-market funds that handle  trillions of dollars in short-term investments.

Policymakers have already tightened regulation for  mainstream banks but are keen to stop higher-risk activities  shifting to less supervised areas such as off-balance sheet  units, hedge funds and money-market funds, which contributed to  the crisis.

This is a clear signal there will be no let up for the  financial sector despite warnings that introducing too many  rules could hinder global economic recovery.