Reading the Signs

I've been looking at the pronouncements from the administration's inner circle searching for indications of what they think the SEC's place should be in a revised regulatory structure. I have found a preference for co-operation between agencies that suggests that the SEC may have to cede its place as the world's most important securities regulator.

The most significant indications come from a report called "Financial Reform: A Framework for Financial Stability" produced by the G30 Working Group on Financial Reform. The Framework is important because of who wrote it: Timothy Geitner, Paul Volcker and Lawrence Summers are all members of the Working Group. Volcker called it "a reasonable indication of the direction in which we might go." Uh huh - I'll take it anyway. Core Recommendation 2 calls for enhanced international coordination to "modify material national differences in standards" and "develop processes for joint consideration of systemic risks". This is in line with Lawrence Summers' expressed desire to prevent regulatory competition by curbing what he calls a regulatory "race to the bottom." The alternative, Summers suggests, is "global co-operation to raise standards."