Academic

The Global Financial Services Regulator

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

While Larry Ribstein is shadow boxing with SOX II, I am looking at today's interest rate cut by central banks around the world and wondering how long it will take before talk of a new global financial services regulator begins to gain traction in the US.

We in the US tend to be a tad self-absorbed, so we see Lehman failing and other U.S.-based investment banks floundering, and we reflexively think about domestic solutions. In the meantime, the rest of the world is absorbing the shock waves emanating from New York and thinking that a global financial system may require supranational oversight. The idea is already being promoted in England and elsewhere.

Will it catch on here?

It's not surprising that the global coordination described by David was initiated by central banks, not elected politicians. Civil servants are more inclined to take a long view and less inclined to play to local interests. My hunch is that U.S. politicians will remain focused on domestic solutions (is there any doubt that SOX II is already being drafted?), but the SEC, the Fed, and other domestic agencies will step up their efforts at global coordination, encouraged by the IMF, the World Bank, and other existing institutions. These things take time, but the drift in the direction of a new global financial services regulator is already perceptible.

Full post as published by Conglomerate on October 08, 2008 (boomark / email).