Displaying items by tag: regulations

(San Francisco)

For all the worries about tech companies and the threat of regulations, one of the best supporting points for the stocks was the strength of their underlying businesses. Despite suffering some losses in share price over the last couple of months, Facebook showed yesterday why the FANGS still look like a good buy. Net income in the first quarter was up 63% versus last year to $5 bn. Earnings per share was up 25% versus estimates. Revenue also jumped 49% versus last year.

FINSUM: Despite all the controversies, Facebook’s advertising business continues to rake in cash by the truckload.

(New York)

Banks may be about to receive a huge gift from regulators in a move that shows just how much the deregulatory push of the Trump era might help the financial industry. The US Federal Reserve, which has significant oversight of the financial regulatory landscape has proposed changes which would loosen restrictions on banks’ balance sheets, allowing them to become more reliant on debt financing, thus having more leverage.

FINSUM: All the details of the new proposals are not clear yet, but this could be a significant boon for banks.

(Washington)

The market is increasingly worried about a big regulatory push against the tech industry. Amazon, along with Facebook, are dead center in the bullseye of the push. However, Bloomberg tells investors not to be too worried. The reason why is that according to five sources inside the White House, there are no active discussions or planning about any regulation that would impact the ecommerce retailer. Even in the case of the Post Office, which Trump has focused on, rates are set by a commission, and the organization is legally barred from charging any shipper less than its cost of delivery, meaning Amazon can’t be underpaying.

FINSUM: This is quite relieving if you are an Amazon investor. However, beyond any immediate threats, we do agree that the government is going to have to reconsider anti-trust regulation in light of how data is being used an abused by large tech companies.

(Washington)

A couple of weeks ago we ran a piece quoting the SEC saying that it was trying to get advisors who had violated client disclosure rules to come forward themselves. The promise was that if they voluntarily came forward they would be treated with a much lighter hand. Well, the SEC has showed the other side of that coin this week, saying “Those of you who counsel investment advisors, we hope you will counsel them to participate in the program … If not, we promise that if we find them later we will punish them more severely”.

FINSUM: The SEC is really going to throw its weight around on this issue and it seems like advisors who have broken the rules would be well advised to come forward.

(New York)

One of the financial industry’s most astute crisis callers has just told Barron’s that she thinks we are in for another financial crisis. Sheila Bair, former head of the FDIC, has successfully called the Enron scandal and the subprime crisis, and now she sees another one looming. The context is that Trump and the White House are leading the charge for less bank regulation, which Bair sees as crazy given this point in the cycle. According to her, “To loosen capital now is just crazy. When we get to a downturn, banks won’t have the cushion to absorb the losses. Without a cushion, we will have 2008 and 2009 again.”.

FINSUM: We are not supportive of too much loosening of bank regulation. Banks have been very profitable since the Crisis, and it is not as if the current regulatory paradigm is over-constraining them