Week InReview

Flipping Volcker

In a much anticipated overhaul of Volcker, the Federal Reserve and other regulators are planning to drop an assumption written into the original rule that positions held by banks for less than 60 days are speculative - and therefore banned.... Instead, banks would have leeway to conclude that their trades comply with the rule, putting the onus on regulators to challenge such judgments....

Friday | May 18, 2018
Vatican says CDS 'gambling' is ethically 'unacceptable'; Pope has previously criticized 'absolute power' of finance (Bloomberg Quint | May 17)

Fed's Quarles suggests U.S. could cut foreign banks' capital requirements
Randal Quarles, the Fed's vice chair for supervision, said he wanted the central bank to review its current rules for foreign banks, particularly the levels of capital it requires global banks to hold internally to guard against failures of U.S. operations (Reuters | May 16)

Here's how you'll know when this bull market is just about done
Look out below if investors become stubbornly optimistic about stocks. Even if it's not at an extreme, bullishness has grown markedly over the past couple of weeks. And, given investors' manic-depressive mood swings, bullishness could reach dangerous extremes in a matter of days. (MarketWatch | May 15)

Volcker rule rewrite is said to drop key trading burden on banks
Agencies may ditch crucial assumption on what's a banned trade; regulators expected to issue Volcker overhaul by end of May. (Bloomberg Politics | May 15)

The Treasury Department's new FinCEN (Financial Crimes Enforcement Network) requirements, intended to help prevent money laundering, requires that financial firms identify and verify the identity of anyone who owns 25% or more of any legal entity and the identity of the person who controls the entity. Finra (Financial Industry Regulatory Authority) recently amended Rule 3310, its Anti-Money Laundering Compliance Program rule, reflects the FinCEN rules. (ThinkAdvisor | May 14)
The Cyber Cafe
Cybersecurity news every Friday
Homeland Security releases cyber strategy to counter evolving threats
The 35-page strategy  hinges on five "pillars" to limit and address threats to digital systems in the U.S. These involve (1) gaining a better understanding of threats and vulnerabilities to critical U.S. assets in cyberspace; (2) reducing "systemic vulnerabilities" in U.S. networks; (3) disrupting cyber crime; (4) limiting the impact of potentially massive cyber incidents; and (5) supporting policy to broadly bolster security of digital systems.

What a cyberwar looks like - and what it doesn't
Even if some claims of cyberwar are overblown - and notions of a looming "cyber-geddon" almost certainly are - the rapid adoption of new technologies as a mechanism of statecraft create ambiguity and give rise to risks that we need to understand.  

Two-factor authentication hackable
This defensive measure can be spoofed using an email containing a bit of code capable of swiping login information. The core of the attack comes in a phishing email, such as the one purportedly sent by LinkedIn to a member indicating someone is trying to connect with them on that social network.
Binge reading disorder
Hand-curated, chosen with love
18 chart crimes and misdemeanors
Truth is relative, falsehoods are seductive, and shortcuts are commonplace.  Chart crimes are a clear manifestation of this. These badly built graphics are blunders at best. Most commonly, they are financial fake news. It's not an antidote, but I think awareness will help counter this subtle phenomenon.
Tidy desks challenge messy creativity
Asked to guess the biggest change on production lines over the past 30 years, most people would probably respond "robots". But having visited many factories, producing everything from cars to condoms, I think the biggest change is more prosaic: it's tidiness.

Should economists try to start measuring existential dread?
Evidence suggests the state of the economy no longer really matters as much as our feelings about it.