Bank Regulation Changes: Does It Change Anything?

Over the weekend the first leaks of what changes to financial regulation seeped out of Washington and London. Peston has the highlights and his take on it here.

What is missing though is anything either exciting or bold. It is firmly in the let’s tweak things a bit and hope it never happens again bit.

There is for example no core consideration of preventing banks from becoming too big to fail. This was the biggest issue in the crisis. AIG (AIG), a non-bank but still a big trader, has cost the US Treasury over $100 billion, which will never be seen again. Indeed much of that money seems to have come the way of Barclays (BCS) and RBS (RBS) banks.

So no big knife to cut up the industry, little comment on the need for any accounting changes or thoughts about what may cause the trip up next time.

What does this tell us? That in their hearts, the US and UK Government know that they were the prime cause of the crisis with low interest rates and large money supplies warping the system. If they did not think this, the changes put forward would be more radical.

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