ABCs of financial aid

Lpc ecb asks european banks for leveraged loan info


May 20 The European Central Bank (ECB) has asked European banks to give detailed information on their leveraged lending operations as it starts to pay closer attention to a market that has come under regulatory fire in the US, bankers said on Wednesday. The ECB asked banks in early May to provide information on leveraged loans to non investment-grade or 'junk' companies, including private equity buyouts, and gave a tight deadline of mid June for submissions. Increased scrutiny by the ECB raises the prospect of European regulation similar to the US leveraged lending guidelines, which were issued in March 2013 and were designed to curb high-risk lending that could pose a systemic risk to the banking sector."Obviously the EBC is thinking about leveraged finance and the way they regulate it. I would have thought that the whole question of leveraged lending guidelines will be raised at some stage as it has been in the US," a senior loan banker said. European banks have been asked to provide information on leveraged loans that they have arranged or underwritten, the terms of the loans, including leverage ratios and covenants and which investors the loans were sold to, sources said. The ECB was not immediately available to comment. The ECB's request to European banks follows a similar request by the Bank of England in late 2014, when UK banks and other London-based banks were asked for similar information.

The BoE's Financial Policy Committee (FPC) said in late March when it reviewed its assessment of risks to financial stability that while no action was necessary, it would conduct regular surveys to monitor the leveraged loan market."... the UK banking system currently appears resilient to stress in the leveraged loan market. The Committee's judgement is that at present no action is necessary to mitigate risks in this market," the FPC said in a statement. The FPC also said however that if the recent loosening in underwriting standards continued, major banks could face increased risks in stressed and illiquid market conditions, particularly if forced to retain loans intended for distribution to investors.

SCRAMBLE FOR INFO European banks are scrambling to meet the ECB's detailed information requests, which they expect to become a regular occurrence."Finding the data is going to be a challenge. The data quality will be questionable because the questions are very detailed," the senior loan banker said.

In the US, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp are also stepping up their reviews and the Shared National Credit review to more than once a year, from 2016. Like the US regulators, the ECB has limited its request to banks, but could extend its remit in the future to non-bank entities, which are currently exempt from regulatory requirements in Europe and the US, bankers said. The BoE's recent findings and lack of action may put the ECB under less pressure to implement tough regulations in the short term, banking sources said. The lack of regulation in Europe's leveraged loan market, compared to a tough line in the US is creating a competitive advantage for European banks, which are currently able to offer more aggressive terms than US rivals."The ECB (is) under less pressure to follow US precedent. That could create a significantly better position for European banks operating in Europe compared to US banks," a second senior loan banker said.

Millions in cia ghost money paid to afghanistan presidents office nyt


Tens of millions of U.S. dollars in cash were delivered by the CIA in suitcases, backpacks and plastic shopping bags to the office of Afghanistan President Hamid Karzai for more than a decade, the New York Times says, citing current and former advisers to the Afghan leader. The so-called "ghost money" was meant to buy influence for the Central Intelligence Agency (CIA) but instead fuelled corruption and empowered warlords, undermining Washington's exit strategy from Afghanistan, the newspaper quoted U.S. officials as saying."The biggest source of corruption in Afghanistan", one American official said, "was the United States."The CIA declined to comment on the report and the U.S. State Department did not immediately comment. The New York Times did not publish any comment from Karzai or his office."We called it 'ghost money'," Khalil Roman, who served as Karzai's chief of staff from 2002 until 2005, told the New York Times. "It came in secret and it left in secret."There was no evidence that Karzai personally received any of the money, Afghan officials told the newspaper. The cash was handled by his National Security Council, it added. In response to the report, Karzai told reporters in Helsinki after a meeting with Finnish leaders that the office of the National Security Council had been receiving support from the U.S. government for the past 10 years. He said the amounts had been "not big" and the funds were used for various purposes including assistance for the wounded.

"It's multi-purpose assistance," he said, without commenting on the report's claims the funds fuelled corruption and empowered warlords. However, Afghan Foreign Ministry spokesman Janan Mosazai told reporters in Kabul that there was no proof or evidence to back up the claims in the story. For more than a decade the cash was dropped off every month or so at the Afghan president's office, the New York Times said. Handing out cash has been standard procedure for the CIA in Afghanistan since the start of the war.

The cash payments to the president's office do not appear to be subject to oversight and restrictions placed on official American aid to the country or the CIA's formal assistance programs, like financing Afghan intelligence agencies, and do not appear to violate U.S. laws, said the New York Times. U.S. and Afghan officials familiar with the payments were quoted as saying that the main goal in providing the cash was to maintain access to Karzai and his inner circle and to guarantee the CIA's influence at the presidential palace, which wields tremendous power in Afghanistan's highly centralized government. Much of the money went to warlords and politicians, many with ties to the drug trade and in some cases the Taliban, the New York Times said. U.S. and Afghan officials were quoted as saying the CIA supported the same patronage networks that U.S. diplomats and law enforcement agents struggled to dismantle, leaving the government in the grip of organized crime.

Nahid Fareed, a member of parliament from western Herat province, who usually supports Karzai's government, said the claims in the story represented a "serious issue"."Any hidden money that the palace receives from indirect channels, such as spy agencies, notably the CIA, is against national interest and is treason," Fareed told Reuters. In 2010, Karzai said his office received cash in bags from Iran, but that it was a transparent form of aid that helped cover expenses at the presidential palace. He said at the time that the United States made similar payments. The latest New York Times report said much of the Iranian cash, like the CIA money, went to pay warlords and politicians. For most of Karzai's 11-year reign, there has been little interest in anti-corruption in the army or police. The country's two most powerful institutions receive billions of dollars from donors annually but struggle just to recruit and maintain a force bled by high rates of desertion.