Global Financial Rules - Oversight

[WhiskeyGirl]

More Calls for Global Financial Rules

From the EU to the IMF, global leaders reacted with shock at the failure of the U.S. bailout plan—and called for more financial oversight

I

n his Monday evening interview, Mandelsohn said that greater international oversight was needed and mentioned that Merkel, French President Nicolas Sarkozy and British Prime Minister Gordon Brown had all recently spoken with US President George W. Bush requesting that he call an international conference to discuss tighter regulations.

Strengthening international regulation of the finance markets is not a new idea. German Finance Minister Peer Steinbrück has long been calling for an international system that would strengthen accountability of traders, ban the practice of short-selling and harmonize stock market regulations in Europe.

Other ideas include those voiced by Peter Bofinger, a member of the German Council on Economic Experts, which advises Berlin on economic policy. He would like to require banks, insurance companies and funds across the world to be required to declare the origin of all liabilities and he wants to see private ratings agencies be jettisoned in favor of a more transparent, state-run system, among other proposals.

Sarkozy on Monday repeated his call for a meeting of world leaders "to set the foundations for a new international financial system." What that new system might look like according to the French president was outlined in a speech he gave last Friday in Toulon. "The idea of an all-powerful market which must not be constrained by any rules, by any political intervention, was mad," he said. "The idea that markets were always right was mad." He also said that self-regulation and laissez-faire capitalism "were finished."

"We can have national or regional authorities, such as the European Union for example, but we need a global guarantor, an institution which monitors standards," he said last Friday. The IMF, he continued, was "ready to do what is required if we are given the mandate." Should such a system not be set up and should national governments continue to bail out failing banks, "it will give the idea of bottomless pits...that the state will come to the rescue of incompetent managers and greedy speculators."

http://www.businessweek.com/globalbiz/content/sep2008/gb20080930_471794.htm?chan=top+news_top+news+index+-+temp_global+business