Regulatory backlash from credit crunch falls short

In a backlash from the credit crunch, regulators and industry groups have
been eager to prevent similar problems from occurring again but their attempts
may be thwarted.

Proposals include redoing rating and accounting methods for complex financial
instruments, reining in bankers’ pay and restructuring government regulators but
only a handful of these proposals will ever come to fruition, the Financial
Times’ Lex
column notes.

The US Treasury’s plan to completely reorganise US financial services
regulation currently looks to be dead in the water, alhough it is possible a
proposal will appear after November when control of the White House and Congress
is in new hands.

Meanwhile, regulators are urging industry to align bankers’ pay with
long-term growth instead of short-term results are likely to fall short without
an official mandate to back them up – the incentive to overlook guidelines to
attract and retain top people is just too high.

Further reading:

the Financial Times Lex story
(subscription only)

Related reading

Fiona Westwood of Smith and Williamson.