Monday, May 10, 2010

We do not need a "Financial Stability Board" we need a "Financial Systems Working for the World Board."

You can put the responsible for the financial stabilization from all the countries of the world on this Board and you will not achieve diversity nor will it serve any real good purpose since finance is much more than a pure wimpy quest for stability.

Allowing these one-kind-of mind regulators to do whatever they please in their mutual admiration club will only result in that hubris that had them thinking they could control for risk; designing capital requirements for banks that required a 12.5 to one leverage when lending to small businesses and entrepreneurs, those on whom we depend so much on for jobs, but cannot afford being rated by the raters; but allowed a 62.5 to one leverage, five times higher, when banks were stocking on public debts like Greece’s, just because some human fallible credit rating agencies rated Greece as good.

Do you believe for instance this should be the Charter for an institution designed to make the Financial System to work for us?

Article 1. Objectives of the Financial Stability Board

The Financial Stability Board (FSB) is established to coordinate at the international level the work of national financial authorities and international standard setting bodies (SSBs) in order to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. In collaboration with the international financial institutions, the FSB will address vulnerabilities affecting financial systems in the interest of global financial stability.

Article 2. Mandate and tasks of the FSB

(1) As part of its mandate, the FSB will:

(a) assess vulnerabilities affecting the global financial system and identify and review on a timely and ongoing basis the regulatory, supervisory and related actions needed to address them, and their outcomes;
(b) promote coordination and information exchange among authorities responsible for financial stability;
(c) monitor and advise on market developments and their implications for regulatory policy;
(d) advise on and monitor best practice in meeting regulatory standards;
(e) undertake joint strategic reviews of the policy development work of the international standard setting bodies to ensure their work is timely, coordinated, focused on priorities and addressing gaps;
(f) set guidelines for and support the establishment of supervisory colleges;
(g) support contingency planning for cross-border crisis management, particularly with respect to systemically important firms;
(h) collaborate with the International Monetary Fund (IMF) to conduct Early Warning Exercises; and
(i) undertake any other tasks agreed by its Members in the course of its activities and within the framework of this Charter.

(2) The FSB will promote and help coordinate the alignment of the activities of the SSBs to address any overlaps or gaps and clarify demarcations in light of changes in national and regional regulatory structures relating to prudential and systemic risk, market integrity and investor and consumer protection, infrastructure, as well as accounting and auditing.

Warning!: After some years of giving the big banks growth hormones to help them turn into “Too-Big-To-Fail-Banks” any day these stabilizers will inform us who these definite TBTF are, and then we are really stuck with them, forever, or at least while they eat each other up and we are finally left with “The Only Bank of the World”