CMC Attends IIB Event with Asst. Treasury Secretary Lago

Earlier this week, CMC attended an event hosted by the Institute of International Bankers (IIB) featuring the US Treasury’s Assistant Secretary of International Markets and Development, Marisa Lago.  Ms. Lago spoke on a variety of topics, including derivatives, within the realm of global financial regulation.  She said that international coordination on derivatives regulation is very important to ensure that no jurisdiction regulates these instruments in a lax manner.  The US government and regulators, she said, are well on schedule for completing all their derivatives related rules by the end of 2012.

Ms. Lago informed attendees that the Financial Stability Board (FSB) has taken up Treasury Secretary Geithner’s proposal for international standards on margin requirements on uncleared derivatives transactions.  This is a recent agenda to the G20 agenda.  She also said that Secretary Geithner has made a Legal Identity Identifier (LII) proposal to the FSB to uniquely identify each individual derivatives transaction for recordkeeping, reporting and auditing purposes.  Ms. Lago claimed that this proposal has private sector support and is being discussed by the FSB.


Carried interest break gets Democratic backers

Among the sticking points in the debt ceiling debate is the White House and Democratic drive to change the treatment of “carried interest,” taxing fund managers’ bonuses at the higher rate that applies to personal income, not the lower one for capital gains.

The stakes are high for the Treasury and for the private equity and hedge fund industries, which are fighting the change hard, and they just got a boost from two Congressional Democrats, Jared Polis and Mike Quigley, who signed a new letter to President Obama defending the current treatment of carried interest.

“Such a tax increase would not only damage our already fragile economic recovery, but it would also cripple the spirit of innovation and entrepreneurship that makes our country so strong,” they write, arguing that the current lower taxes on carried interest encourage private equity investments “in new, untapped markets.”

The two dismiss the notion that the change would merely close a “loophole” and write that the tax would “devastate” other areas of the economy as well, including the struggling commercial real estate industry.

The full letter is here.