Is This the Start of US Banking Protectionism?

Published by Filipe R. Costa on Wed, 08/08/2012 - 10:36
US protectionism

Daily Market Commentary for August 8: London isn’t happy with the recent crack down on UK Banks. Standard Chartered was impulsively accused by a New York banking regulator of conducting money laundering activities and has seen its name added to the growing list of British chased banks. The news came as a bomb for the bank, for shareholders, and for the UK government.

There is a growing opinion that the US may be conducting some kind of banking protectionism as recently there have been overzealous investigations centred on foreign banks while US banks were able to avoid all the scrutiny. Barclays, Lloyds, ING, Standard Chartered, Credit Suisse are some of the names that one way or another had or will have to settle for huge fines to avoid seeing their license to conduct operations in US Dollars revoked. Benjamin Lawsky from the recently created New York State Department of Financial Services came too far by not only accusing Standard Chartered but also bringing to the public important private information filled with aggressive language that amplifies the negative impact on Standard’s shares that have lost more than 20% in two consecutive sessions.

This case is far from being solved and will certainly involve politics as London starts to react and many are accusing the US of trying to get some of the City business. This morning some US institutions tried to jump outside this mess by stating they were not informed of Lawsky’s moves. Standard Chartered recovered more than 8% at the opening.

While the banking war continues, the FTSE opened in downtrend today after closing 0.56% higher yesterday. Equities continued the uptrend both in Europe and the US and commodities headed north too. Apart from any scandals, the tone is soft and many investors and trades are out for a vacation.

Name Last price Close Price % 5-Day % YTD %
IBEX 35 07/08/2012 7211.1 2.23 7.02 -15.82
Crude oil (Light Sweet) Composite 07/08/2012 93.32 1.53 6.31 -5.74
FTSE MIB 07/08/2012 14655.5 2.19 5.5 -2.88
CAC 40 07/08/2012 3453.28 1.52 4.91 9.29
FTSE 100 07/08/2012 5841.24 0.56 3.65 4.83
DAX (Xetra) 07/08/2012 6967.95 0.71 2.89 18.13
Nasdaq 100 Index 07/08/2012 2717.16 0.86 2.82 19.29
S&P 500 07/08/2012 1401.35 0.51 1.6 11.43
Dow Jones Industrial Average 07/08/2012 13168.6 0.39 1.23 7.78
EUR/GBP - £ per Euro 07/08/2012 0.7932 -0.19 1.11 -4.8
EUR/USD - US$ per Euro 07/08/2012 1.2384 -0.02 0.75 -4.4
GBP/USD - US $ per £ 07/08/2012 1.5611 0.16 -0.36 0.52
Gold (LBM) $ 07/08/2012 1612.3 -0.14 -0.48 2.9