Tag: Economics

Shoot the messenger!

Financial accounts are supposed to enable readers to understand the financial position of the entity under review. But, yesterday, the National Association of Pension Funds published a report attacking the notion that accounts provide neutral and reliable information about an employer’s pension scheme liabilities. The critique, written for the NAPF by Dr Iain Clacher and Professor Peter Moizer of Leeds University Business School, is pretty damning of the standard setters.

Bankers cooking with Gas?

The separation of retail and investment banks is back in the news following the Chancellor’s recent Mansion House speech. Ever since the Government bail-out of Royal Bank of Scotland and Lloyds in 2008, there has been a pressing desire to ensure that tax-payers are never again called upon to rescue the financial system. The Independent Commission on Banking, chaired by Sir John Vickers, is looking at alternatives. The Chancellor has endorsed their interim report and awaits the final report in September.

Compulsory separation of business entities is not new. It has been used as a solution to behavioural business problems in many contexts, usually after a period of fierce debate during which the business(es) argue that separation is unnecessary and unworkable, or a combination of both. We are certainly seeing those arguments advanced in the case of the banks. Not just from the bankers: many commentators are unconvinced, too.

Accountants becoming effective?

I think the three words at the end of the following sentence must be the most chilling – and the most heart-warming – I have ever read from an accounting standard-setter:

It’s very disconcerting …

… to be giving a presentation whilst the audience is tweeting their comments onto a screen behind your head. Perhaps that’s going to be the way of the future.

The Hutton Contribution

I had always thought that employee contributions into a pension scheme were a mistaken idea. Should I be re-thinking that in the light of Hutton’s report out today? Or should Lord Hutton?

Probably the best regulator in the world?

I see the Treasury has been consulting on its new approach to financial regulation. Some of the main ideas – reforming the tri-partite model – have been discussed at length elsewhere. What caught my eye were the issues which address our new government’s approach to regulatory culture.

Constitution nil, Clegg & Coase won

I have written before about Coase’s Theorem – whenever the law creates or imposes an inefficient rule, people will bargain or contract around it – named after Nobel laureate, Ronald Coase. It seems that Coase’s theorem works just as well for our constitution.

For weeks, if not months, we have been told that, if the General Election resulted in a hung parliament, the incumbent Prime Minister had first go at forming a government. Well, it took just one sentence from Nick Clegg at 10.30 am on the morning after the night before (“I’m talking to Dave”) and Gordon Brown was left high and dry for as long as Nick Clegg wanted it that way.

Time to start thinking again, I think

Lindsay Tomlinson is calling for a summit to change the way pension costs are calculated in company accounts. As chairman of the National Association of Pension Funds, Tomlinson would say that, wouldn’t he? Except that Lindsay Tomlinson is also a director of the Financial Reporting Council, the parent body for the UK’s accounting standard-setters.

Game, Stress & Match

I took the morning off to watch Andy Murray’s semi-final in Australia before heading to the Centre for the Study of Financial Innovation for a discussion on risk modelling. Intriguingly, it was the guys sponsored by RBS who outshone at both events.

Banking on it

A friend writes to tell me that she has been appointed to the Future of Banking Commission set up by Which?. Which reminds me that I have yet to return to my September Blog on the subject of regulation, in particular the regulation of banks.

I don’t subscribe to the “too big to fail” approach. I don’t believe it is about size. Who, prior to 2007, would have thought that Northern Rock was “too big” in any meaningful sense of the phrase?