Via our buddy at Calculated Risk comes this news story from the Telegraph:
On the eve of the G20 meeting of finance ministers in Scotland, Andy Haldane, the Bank's executive director for financial stability warned that the relationship between the state and banks represents a "doom loop" which will keep inflicting crises on the public unless arrested.
The warning, which follows Governor Mervyn King's call for investment banks to be split from their high street wings, is the most radical yet from the Bank, and comes amid growing concern that the G20 has abandoned any plans for far-reaching reforms.
...
The pair diagnosed five ways in which banks capitalised on the implicit state guarantee for the financial system, saying they were "the latest incarnation of efforts by the banking system to boost shareholder returns and, whether by accident or design, game the state."
So.
Where is the reform we were promised?
Our recent experience with the near-collapse of the world economic order should have forced governments to immediately begin creating a new regulation programme for banks.
It didn't.
Instead, we're getting this:
Amid the ongoing financial regulation overhaul, the banking industry is hoping to pull off a quiet power grab that has eluded its grasp since the Great Depression, by stripping the independence of the board that sets financial accounting standards.
The move could effectively let banks set their own accounting standards in rough economic times.
Astonishingly, at a time when the public is crying out for greater regulation to limit excessive risk-taking by financial institutions, the banks are trying to get Congress to agree that the next time there's a big downturn, they should have the ability to alter their accounting standards -- essentially, fudge the numbers -- so that the public and investors won't be able to tell how insolvent they really are. By ignoring their declining asset values, they can avoid the standard requirement of raising more capital.
What Wall St. is asking for is so incredible that it's even set off alarms at the normally finance-friendly U.S. Chamber of Commerce.
Guess what:
They'll get exactly what they want.
We won't get the reforms we need and -- in fact -- we'll allow banks to further dodge the safety mechanisms of prudent regulation. The reason is that neither the White House or top Democrats really want the reforms.
Simply put:
Everybody who is in a position to change things for the better is fundamentally anti-regulation when it comes to business, including finance.