Systemic Risk Regulator: Yep, It's Gonna Happen
I'm going to go out on an extremely short limb here and say that the creation of a domestic systemic risk regulator is now a sure thing. But the devil has yet to burrow into the details, and I'm sure he's looking forward to that.
The U.S. Chamber of Commerce officially signed on to the concept in a long position paper released Wednesday (impressive list of signatories, guys). Other industry groups, like the Financial Services Roundtable and SIFMA, have given their blessing already, and Jamie Dimon, speaking at the Chamber of Commerce yesterday, joined the chorus. (I couldn't find the text of Dimon's speech, but here's a quick summary by 24/7 Wall Street.)
Some folks are skeptical. Megan McArdle, on her economics blog, Asymmetrical Information, expressed "niggling doubts" that a more centralized regulatory system will really save us. She points out that some countries with centralized regulation are in even crummier shape than we are.
And Sebastian Mallaby, in a Washington Post op-ed last week, fretted that a systemic risk regulator might "deliver less than expected." It's tough, Mallaby notes, to ferret out the killer risks in a global financial system with lots of hiding places. And even if we do learn that risk is overly concentrated in certain kinds of deals, he wonders, how will we decide whose positions to scale back?
Ben Bernanke, in the speech I posted about yesterday, agreed that the job will be tough. "Implementing a comprehensive systemic risk program," he said, "would demand a great deal of the supervisory authority in terms of market and institutional knowledge, analytical sophistication, capacity to process large amounts of disparate information, and supervisory expertise." Quite so, Mr. Chairman.
Since the answers to all our problems these days are supposed to lie in technology, I thought I'd link to this paper, Building a Modernized Financial Regulatory System. According to the authors (an IT group called the Industry Advisory Council), we'd better call in the tech squad if we want to achieve systemic bliss.
image: azgfd.gov
The U.S. Chamber of Commerce officially signed on to the concept in a long position paper released Wednesday (impressive list of signatories, guys). Other industry groups, like the Financial Services Roundtable and SIFMA, have given their blessing already, and Jamie Dimon, speaking at the Chamber of Commerce yesterday, joined the chorus. (I couldn't find the text of Dimon's speech, but here's a quick summary by 24/7 Wall Street.)
Some folks are skeptical. Megan McArdle, on her economics blog, Asymmetrical Information, expressed "niggling doubts" that a more centralized regulatory system will really save us. She points out that some countries with centralized regulation are in even crummier shape than we are.
And Sebastian Mallaby, in a Washington Post op-ed last week, fretted that a systemic risk regulator might "deliver less than expected." It's tough, Mallaby notes, to ferret out the killer risks in a global financial system with lots of hiding places. And even if we do learn that risk is overly concentrated in certain kinds of deals, he wonders, how will we decide whose positions to scale back?
Ben Bernanke, in the speech I posted about yesterday, agreed that the job will be tough. "Implementing a comprehensive systemic risk program," he said, "would demand a great deal of the supervisory authority in terms of market and institutional knowledge, analytical sophistication, capacity to process large amounts of disparate information, and supervisory expertise." Quite so, Mr. Chairman.
Since the answers to all our problems these days are supposed to lie in technology, I thought I'd link to this paper, Building a Modernized Financial Regulatory System. According to the authors (an IT group called the Industry Advisory Council), we'd better call in the tech squad if we want to achieve systemic bliss.
image: azgfd.gov
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