Live From The Capital Markets Summit

By • Mar 26th, 2008 • Category: Audit Quality



The summit started a little slowly. One panel included Steve Bartlett of Financial Services Roundtable. He rattled off several proposed reforms they are putting on the table for legislative action. Then they didn’t allow questions from the audience in order to stay on schedule.

One proposed reform is to allow the audit firms to raise capital from outside sources. And where would they get money that wouldn’t be subject to independence conflicts? Staff at a firm that audits Citibank, for example, already can’t even have a checking account there, regardless of whether they are involved in the audit. Maybe they can get money from the same place as some of their loser banking clients – Sovereign Wealth Funds.

I checked back with Steve Bartlett at the Financial Services Roundtable last Friday.  I wanted to get the document that discussed the proposed reforms he referred to. I particular I wanted to read more about the ones relating to the audit firms.  In searching various documents on their site, I couldn’t find any reference to the comment about recommendations regarding access to outside capital.
I heard back from Mr. Bartlett’s staff this morning.  Per his staff, there was no comment made about access to outside capital.  Documents on the Financial Services Roundtable site make no reference to a recommendation for access to outside capital for audit firms.  This discussion comes up in other forums occasionally.
Is it possible Mr. Bartlett commented beyond the scope of the report? Or did I not hear correctly?  There is no text of his comments on the US Chamber site.  The US Chamber’s report from 2006, “Audit Firms At Risk” is here.
I asked a question of Treasury Secretary Paulson. Edith thinks I’m on my way to being a gadfly. But I have a method to my madness.

First, I ask questions in these forums to get attention to the blog.

Call me selfish.

Second, I can ask the questions no one else can ask.

My question and his response were broadcast live on CNBC.

The clip is here.
He gives a long winded answer to my question regarding the lack of transparency in the OTC futures markets versus the regulated markets.
I noted that the problems at Societe Generale were left to fester versus the issues with the trader at MF Global were identified almost immediately by the Chicago Mercantile Exchange Clearinghouse. After a lot of hemming and hawing, Paulson said that the Treasury will be supporting the “investor-owned” cooperative clearinghouse proposal being put forth by his buddies at the Wall Street investment banks in order to break up the perceived “monopoly” that the Merc has on this business. Basically, his friends do not want the Merc to be as powerful, and as good, as it is.

He alludes to the endorsement of the investment bankers clearing house being part of the upcoming report that will be issued by President Bush which will make recommendations for improved regulation of the financial markets. For more info on this report, go here.

More updates later.  I am flying back to Chicago Wednesday night.  In the meantime I’m writing up my notes while having a glass of Russian River 2004 Pinot Noir in the Mayflower Lobby Bar. With my stilettos and other *attributes*, I’m getting more looks here than before the Spitzer publicity. Do those kinds of girls use a Mac?

Last night I had dinner, as any woman traveling alone does, at a sushi bar. I found a good one via the Economist Cities Guide.  It’s called Kaz Sushi.  When I got the bill, Yori, the sushi chef, and I were both surprised at how much sushi and sparkling sake one girl could enjoy in one sitting.

But the best was saved for last. The dessert was a confection called , “Tri color mochi ice cream with ice cream covered by a rice sheet flavored by adzuki bean, chocolate espresso, li hing mango.”

Heavenly.

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One Response »

  1. Sec.Paulsen spoke long on the subject of derivitives and while I think Hank knows a couple of things, clearly this a complicated issue and has no easy answer.
    Derivitives were intended to hedge risk but has morphed in other directions seemingly out of bounds in some instances.
    Some regulation is needed.

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