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w(h)ither financial regulation? June 26, 2009

Posted by Bradley in : financial regulation , trackback

As the Financial Stability Board holds its inaugural meeting, and the IMF invites civil society to comment on IMF governance (here), Vince Cable at the New Statesman has a depressing assessment of what is going on with financial regulation reform in the UK:

It is deeply worrying that some of the most important policy questions for a generation are now being decided by default and in a political vacuum…The response to all these questions is a lazy, uncritical, self-serving one: that, bar a few regulatory tweaks that will need to be made, the previous regime was essentially fine….Yet it is only a matter of months since half of the British banking system collapsed and had to be rescued by the state through total or partial nationalisation.

I’m not sure that things are much better in the US. The administration’s reform proposals are much weedier than they might have been. ISDA is busy warning the FSA to be more careful and slower about introducing changes to regulation. And ISDA suggests that the FSA can learn from the policy discussions in the US:

…further levels of standardization may actually be of debatable value. In this area, the public-policy debate in the US is instructive. A number of end-user organizations have indicated quite clearly that, while they support the objective of greater systemic resilience, they oppose artificial limits on the range of contracts available to them. Their needs are only truly served by the ability of financial services firms to tailor contracts to their specific requirements.

Sounds like business as usual.

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