Sleight of Hand is Not the Best Reform |
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June 21, 2010
A US House-Senate conference has started work on merging the chambers' respective financial reform bills. This tortuous process still has some way to go. The good news is that the plans are similar, and not that different from the blueprint suggested by the administration last year. Agreement will most likely be reached, and the final measure will tick the main boxes. It will be better than nothing. The bad news is that it will be no more than a start.
A US House-Senate conference has started work on merging the chambers' respective financial reform bills. This tortuous process still has some way to go. The good news is that the plans are similar, and not that different from the blueprint suggested by the administration last year. Agreement will most likely be reached, and the final measure will tick the main boxes. It will be better than nothing. The bad news is that it will be no more than a start.
At a conference last week in New York, 15 distinguished finance and economics scholars presented their own recommendations for financial reform*. The Squam Lake Group , as the economists call themselves, represents a wide range of opinion but is in agreement about most of what should happen. Broadly, the emerging finance bill conforms to the same consensus. Ben Bernanke, chairman of the Federal Reserve, told the meeting: "It appears that final legislation that addresses in some way the great majority of the recommendations . . . could be enacted in the next few weeks."
"In some way": that is the problem. The fine print will be of paramount importance, but in most cases critical details will be left to the discretion of regulators - or will be settled or shelved in various international forums. At best, the endeavour will stretch on for many months. Ahead of this week's Group of 20 meeting in Toronto, Dominique Strauss-Kahn, head of the International Monetary Fund, is complaining that the commitment to global co-operation on financial regulation is fading, and has said that the task facing policymakers is still "huge".
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