Regulatory backlash from credit crunch falls short

In a backlash from the credit crunch, regulators and industry groups have been eager to prevent similar problems from occurring again but their attempts may be thwarted.

Proposals include redoing rating and accounting methods for complex financial instruments, reining in bankers’ pay and restructuring government regulators but only a handful of these proposals will ever come to fruition, the Financial Times' Lex column notes.

The US Treasury’s plan to completely reorganise US financial services regulation currently looks to be dead in the water, alhough it is possible a proposal will appear after November when control of the White House and Congress is in new hands.

Meanwhile, regulators are urging industry to align bankers’ pay with long-term growth instead of short-term results are likely to fall short without an official mandate to back them up – the incentive to overlook guidelines to attract and retain top people is just too high.

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