Broad, shallow and vague

Author: | Published: 1 May 2008

The US Treasury Department has released its much-anticipated report on the US financial regulatory system. The report, entitled a Blueprint for a Modernized Financial Regulatory Structure, is required reading for market participants and devotees of regulatory policy alike. But a close reading of the Treasury report suggests that it is less a blueprint for action than a call for study.

Paradoxically, the current financial crisis has made it more difficult for the Treasury to call for action because it fears that any such a call would invite the kind of Sarbanes-Oxley reaction that attended the last US market disruption. Each recommendation, ellipsis and calculated ambiguity in the Blueprint should be read against the background of the Treasury's concern for near-term reform based on an overreaction to recent events, and its long-term objective of promoting deregulation to enhance the global competitiveness of the US markets. Of necessity this Blueprint is more...