The video:

Article: US custodian banks hit by shift into cash

Excerpt: “Low interest rates have put tremendous pressure on custodian banks that manage funds for large institutions and retail brokerages, with the Federal Reserve’s commitment to near-zero rates through 2013 make it difficult to invest customer funds in safe investments that generate return.”

Article: Dismay of MF Global clients should spur change

Excerpt: “After Lehman collapsed, the UK government set up a new bankruptcy regime for brokers which was intended to ‘ensure the return of client assets as soon as practicable’. (…) Almost three months later, clients of MF Global’s London arm are still waiting for their money. (…) MF Global’s US trustee has distributed 72% of what is owed to commodities clients.”

Article: Warning on returns from MF Global UK

Excerpt: “[KPMG, MFG's administrator has warned] that customers might not get all their money back. Many clients did not realise their accounts were non-segregated until MF Global collapsed, according to Anant Shah, a fund manager at Whitepearls, a Mauritius-based family investment vehicle which claims to be trying to retrieve $35m in segregated accounts. He said the resolution in the UK was ‘disgracefully slow, given that real lives are being affected . . . it leads us as well as others to consider never opening another account with a UK broker’. Unlike counterparts around the world, such as the US and Canada, the UK has yet to return any assets to clients”

Article: KPMG defends efforts on MF Global claims

Excerpt: “The biggest issue for KPMG (…) is determining which clients have money in MF Global UK’s segregated funds. Those with non-segregated funds have been put into the unsecured creditors’ pool and (…) the issue was complicated by many customers looking to switch the status of their accounts in the final few days. (…) Under the new rules client monies are being used to pay for secured creditors.”

Book: “Lords of Finance: The Bankers Who Broke the World”

Excerpt [context: the partial collapse of the US banking system between 1931-33]: “the mounting bank failures intensified hoarding – $500 million dollars [approx. $100 bn today] in cash was pulled from banks. While most of this was stashed away in traditional hiding places – socks, desks, safes, strongboxes under the bed, deposit vaults – some found its way to very unconventional spots, including, according to congressional report, ‘holes in the ground, privies, linings of coats, horse collars, coal piles, hollow trees’. Anywhere but bank accounts.”

While some will try pushing from one side…

Article: Shake-up in US fixed income research rules (“new rules to deal with conflict of interest in fixed income research are set to be proposed by US financial industry regulators”)

Excerpt: “A recent report highlighted potential loopholes to equity rules (…). The rules did not prohibit bankers and analysts from talking outside the firm.”
→ does anyone really take it seriously that one could legislate this risk away? Sometimes an image is worth a 1,000 words, but common sense is worth 10^12 pages.

… others show for the umpteenth time that laws exist to be reinterpreted (bent? broken?) as the occasion presents itself…

Article: Basel III – the case for the defence

Excerpt: “In Europe, Paris and Berlin are again proving that they see no contradiction between railing against financiers while at the same time undermining hard-won global agreements on tighter regulation.”

… even because it is incredibly hard to comply with all the laws and regulations of all the countries (states? cities?) one operates in and still find time to actually get some work done.

Article: New rules are struggle for industry and regulators

Excerpt: “It is unclear whether a non-EU bank would have to set up a branch in the EU if it wanted to become a member of a clearing house based in the region. There is also confusion over how financial institutions operating globally would comply with Dodd-Frank, Emir, Mifid and legislation in Asia.”

In the age of multi-disciplinary events, this is one of the best. You can keep track of it live on Livestream.com, check out the event’s blog on Tumblr, its Twitter feed or Facebook page. Enjoy!

Then we found a post by the Epicurean Dealmaker that destroys the study precisely on these arguments. As he says after presenting his points, “Perhaps one day some academic will actually make the effort to understand how my industry works before they design a study to explain it”. And as he says, we also yearn for a good study into the subject.

The second article in the Financial Times tries to tack the same “double standards” theme onto Germany, given its treatment of the heavily-indebted Eurozone members. It doesn’t work nearly as well, but for argument’s sake – and its use of Goethe quotes from Faust – it’s an interesting read.

The big point behind both stories: the protectionism that drives the huge taxation making imports so expensive in Brazil as to justify, in some cases, the airfare and hotel expenses.

The 13-minute “60 Minutes” segment on Howard Buffett (Hint to CBS – don’t have more than one ad per online video, it is absolutely irritating):

60 Minutes “Overtime”: Growing up Buffett

60 Minutes: Why Howard?

Video: Breakout Blog’s 4-minute discussion of Howard Buffett.

From the “interesting but not to the point” series, Howard has some interesting things to say about plowing:

Berkshire’s isn’t the only board he’s in: count Coca-Cola Enterprises (the bottler) ConAgra and Archer Daniels Midland as very important companies he’s been in the boards of. He is an accomplished philanthropist as well.

Just a reminder: Buysiders.com is all about sharing useful investing building blocks and mental models with a community of people interested in these subjects, and this post is highlighted exclusively for overall capital allocation policies that might be applied to other investments. We don’t advise on specific stocks nor do we make any recommendations, as well as we may or may not hold Apple at any given time and so on.