10/12/2013 World Business Report

the seafloor is directly connected to its continental shelf.

Those are the latest headlines. It is time for World Business

Report. The new era of big brother banking

looms. Regulators vote on whether to bring in Paul Volcker's rule and

fundamentally change how US banks operate for ever.

Dumping General Motors. The US government sells its last stake in

the carmaker, losing $10 billion of taxpayers money in the process.

You are with World Business Report. In a moment, we will be heading

light to New York to find out why the US government chose to sell its

last GM shares. But worst of all, Wall Street banks will soon get a

decision on a controversial ban that could not only affect how they run

their business but also the ability to make money. The ban, it. Banks

for trading `` from trading for their own gain and limited the

ability to invest in hedge funds and private equity. Several regulators

are set to vote on the proposal. private equity. Several regulators

are set to vote on the proposal Or are set to vote on the proposal. Or

it make the financial sector any safer?

The failure of Lehman Brothers shocked the world. We did came the

realisation that Casino fever had taken over the banks, and they had

been rolling the dice with our money. Today, regulators will vote

on the Volcker Rule, a measure designed to place restrictions on

the finance industry after the chaos that it has caused. The big banks

use large amounts of money, mostly borrowed money, to place big bets so

that they can make big bonuses. But the Volcker Rule is supposed to stop

that type of gambling because it is very high risk and if those bets go

the wrong way, like they did in 20 `` 2008, they cannot only threaten

the bank itself but the entire financial system. The Volcker Rule

was named after this man, Paul Volcker. He was a former chairman of

the Federal Reserve, who pushed for its interruption `` introduction

when he served as an advisor to President Obama. It is considered

the centrepiece of bank reforms referred to as the Dodd`Frank act,

after the lawmakers who helped craft to be built three years ago. Its

implementation was delayed in part because of strong opposition from

the finance industry. I think the finance industry has been lobbying

very aggressively to make sure it does not change. But unfortunately

for many people, in the larger institutions, it will have a sniff

against impact. This seems to be a a lot more tough, coming down the

pipe, that people thought it would join to be. The banks, whose power

and complexity has challenged regulators, are in for a shock. The

financial crisis on Wall Street is over. But the fallout is not. And

braced for new rules aimed at securing them form `` from taking

the kind of risks that pose a danger to us.

We heard, big bets to make big bonuses. Do you believe that this is

the right reaction to prevent that kind of thing from happening again?

It is clear there was a failure in banking and 2008 that caused the

global crisis, that it has been the reaction to that crisis which I

think is potentially very different. This new rule is potentially

throwing the baby out with the bathwater. One of the successes of

Western economies being able to grow so spectacularly over the last 0

so spectacularly over the last 70 years is because they have very

efficient markets. For markets to be efficient and allocate cash properly

in the economy, to allow companies to grow and therefore create new

employment, means that they have to be free to do that. Unfortunately

the Volcker Rule and some of the other things that are happening

makes markets less efficient. That is a long`term danger. White is ``

what is the right answer? They see your point of view, that markets

need to be free, but we were failed on a spectacular level all over the

world. Not only were banks needing to be bailed out, that other huge

companies, such as carmakers, we will be talking about General Motors

in a minute. The ramifications were enormous. There has to be an element

of oversight, there needs to be efficient regulation. There needs to

be an understanding and good corporate governance. Within the

banks, there has to be learning from the mistakes. But it will still be

an overreaction to make it difficult for banks to trade, which is

effectively what the new rule is going to be. If we do not have

liquidity in the markets, we will have bigger crises in the future.

Bill will talk us through today s newspaper stories as he will return.

The US government has sold its remaining shares in General Motors

at a loss of $10 billion. The US Treasury spent $49.5 billion bailing

out GM in 2008, when it took a 61% out GM in 2008, when it took a 61%

stake in the carmaker. The government began selling its shares

in November 2010, since emerging from bankruptcy. GM has reported 15

profitable quarters, has almost $27 billion in cash, and is considering

rewarding shareholders with a dividend payment. Let's speak to

Geoff Bennett. Good morning. Tell us about the

timing of the sale. What do you think? The sale is allowing GM to

start 2014 as a fresh, new company. It is no longer going to be known as

government motors in the State. It will have a chance not only to

restructure how it pays its executives and whether or not it

pays a dividend to shareholders but pays a dividend to shareholders but

it can also work on beginning to win back customers who may have been

turned from purchasing a GM vehicle because they disagreed with the

bailouts by the government. Good timing for GM, but what about the US

taxpayer? The US taxpayer does seem to be on the hook for this for 10

to be on the hook for this for $10 billion. Their run no signs the

government is going to go after GM to try to reclaim that. If you look

in total at the bailout programmes, for the automakers and the banks,

and overall, they came out ahead, but on GM they are walking away with

a loss. But in the end, what the government will save, the loss could

have been bigger if GM would have gone through an unstructured

bankruptcy, we could have seen loss of jobs, and a whole heck of a lot

of problems, particularly for the midwest. Do you agree that this was

ultimately the best outcome for GM, because it is in much better shape

now. I really do. There was no other place for General Motors to go to

get money. The banks would not lend money so they had no`one else to

turn to but the government. If we let GM go into a bankruptcy, and it

became problematic, you would have had auto suppliers not getting paid,

auto suppliers leading off people, and it would have created a domino

effect through the auto industry. That industry employs a lot of

people through the US, both in the midwest and throughout the south.

Any disruption to General Motors and also Chrysler, would have played out

in a real bad way for the US. Interesting analysis of what is

going on with General Motors. Other business stories, Uruguay is on

course to become the first country in Latin America to legalise

marijuana, launching a social experiment as part of a broad

strategy to combat drug trafficking. The green light will likely come

today with a vote in the Senate. The green light will likely come

today with a vote in the Senate It today with a vote in the Senate. It

was already passed through the lower chamber. Passage in the upper house

is assured because the ruling party controls both.

Mexico's plant energy bill goes to the full floor of the Senate for

debate today. It outlines plans to open up the world's 10th biggest oil

producer for private investment. It producer for private investment It

marks the most Attic overhaul of the industry in 70 years. This is much

bolder than the draft proposed by the governing party in August.

Let's have a quick look at the markets today.

The euro is at a five`year high against the yen. Very strong against

the dollar. We are getting use from China, industrial production

numbers, which will be swaying sentiment as well. To mention buried

quickly, the Dow closed a very marginally, as did the broader S

500. Dementia has been described as a

global disaster waiting to happen. Ministers from the