Old-Fashioned Regulators Miss What’s New in Finance
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July 24 (Bloomberg) -- Is the financial system any safernow than in 2008? There’s been some progress but less than youmight think. I argued last week that regulators should put inplace much tougher bank capital requirements than planned, forinstance, and step up efforts to segregate different kinds offinancial business to suppress contagion.
Measures such as this, however, don’t directly confront thebiggest gap in the emerging regulatory system: the treatment ofwholesale short-term lending. This is where the meltdown of 2008started, and probably where the next such catastrophe willbegin.