Ontario’s Mayman Sees Risk of Overzealous Regulation

Date: Friday, April 23, 2010
Author: Bloomberg

Gadi Mayman, head of the Ontario Financing Authority, said there’s a risk of “regulatory overzealousness” in the wake of charges against Goldman Sachs Group Inc.

“I’m not going to stand up here and defend Goldman or anybody else, but I will say I am concerned about overzealous regulatory responses whether that’s out in the U.S. or out in the U.K., both places where beat the banker is a very popular game right now,” Mayman said at a Toronto conference organized by Euromoney.

Mayman said it’s important to “make sure there are not unintended consequences of any regulatory or accounting changes that would make it substantially more difficult for us to do the kind of hedging that we’re talking about.”

Mayman, who heads the Canadian province’s borrowing program, said in an interview after a panel discussion that he’s concerned the pendulum will swing too far the other way, and that regulators will make it more difficult for banks to do the “good things that banks do.”

Goldman Sachs, the most profitable firm in Wall Street history, was sued by the SEC on April 16. Regulators claim that Goldman created and sold a collateralized debt obligation linked to subprime mortgages without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the vehicle.

Ontario plans to issue C$39.7 billion ($39.8 billion) of debt in the fiscal year that started April, with about half of that issuance in foreign markets, Mayman said. About 25 percent of Ontario’s debt is denominated in foreign currencies, and only 0.1 percent is exposed to currency fluctuations.