Walker counters Liberals’ attack
Saturday 25th October 2008, 10:49AM BST.
CHIEF Minister Frank Walker has written to the Liberal Democrat Treasury spokesman, Vince Cable MP, to challenge his criticism of Jersey’s financial services regulation.
Senator Walker has invited Mr Cable to visit the Island to meet the regulator, the Jersey Financial Services Commission, after comments published in the Mail on Sunday a fortnight ago. Mr Cable told the paper that the Channel Islands ‘have provided a weak link in the chain of financial regulation and tax integrity’.
In the letter, which Senator Walker has released to the media, he wrote: ‘I cannot let your recent erroneous comments about Jersey go unanswered. Jersey is not only a jurisdiction that is committed to international standards, it is also a leader in the setting of standards in respect of the regulation of trust and company service providers, which are not regulated in most onshore jurisdictions, including the UK and USA. ‘In the next few weeks the IMF will be undertaking a further assessment from which we are confident we will achieve compliance ratings at least as good as, if not better than, EU member states.’
Pictured: Chief Minister Frank Walker
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Jersey and the other offshore finance centres have happily played their part in the financial chaos we are now seeing. They set up the SPVs which were used to securitise all these toxic assets. Frank Walker doesn’t have the first incling about the part we have played.
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I have said the same elsewhere, none of my clients have any SPVs involved in the USA and UK property markets, they are away from these jurisdictions and I hear similar comments from friends within finance. A few people appear to have very little knowledge of what really is going on within Jersey finance firms. This shows in some of these posts.
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I’ve worked for a number of Alternative Asset Managers who’ve used the Channel Islands and its lawyers and administrators to help them setup their slice and dice securitisation vehicles. So opaque and complicated were they that they had to keep the Monte Carlo simulations running over a weekend to get a handle on them and they could never really value them. I could rattle off half a dozen of other organisations that have used the channel islands for these purposes. Many of our top legal and admin firms have bought up and expanded firms in the likes of Cayman and Dublin to capture the more racey business over there as well. Believe me I know what I’m talking about. I do appreciate that you are right at the end of the chain over here and don’t see the whole picture. That’s actually a good arguement for the big oversight bodies to lay down the law across all jurisdictions as Jersey is never going to be the turkey that voted for Xmas on this one.
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David I am not sure what these slice and dice deals are you mention – perhaps you could be more specific. The massive numbers of CDO structures that crucially played pass the parcel with the toxic US mortgages have not used Jersey companies. I am aware that there are a small number of synthetic CDO structures and of SIV vehicles in Jersey. The latter have got in to trouble as has been discussed widely in the financial press. The numbers of synthetic CDOs are insignificant. I can’t speak for Guernsey with certainty but my understanding is that no rated transaction has ever used a Guernsey vehicle and it has no securitisation business whatsoever.
A very significant number of structures use Irish companies as you mention. The fact that these and scores of UK SPV companies are used in securitisations suggests that the respective governments and regulatory bodies have exercised no more or better oversight than the Jersey authorities. In fact Dublin has captured very significant amounts of structured finance work by enacting specific legislation to accommodate it. It is to an extent because the oversight and regulations in force for structured vehicles in Dublin is so industry friendly and unobtrusive that it has attracted so much business at the expense of traditional offshore jurisdictions – in effect Dublin became an offshore centre so far as these structures are concerned. So who should Jersey regulators look to as role models ? Neither Ireland, the UK or by implication the EU of which both are members would seem to be exercising any higher standards ….
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Vince Cable should take up Mr Walker’s offer. The inaccuracies I am reading about Jersey’s finance industry makes it sound like we have some locals that are equally ill informed.
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