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Posts Tagged ‘Reform’

The true aim of a new round of financial reform and bank regulation in America should be financial stability at all levels of commerce.  While such legislation should seek to strengthen the position of the U.S in the global economy, it must also consider that ripples in Thailand may become waves in Russia and a tsunami in Greenwich—remember LTCM?

The danger of enacting new rules that truly shift the balance into making the U.S. an unattractive base for some of the world’s best financial minds must not be ignored.  If Wall Street moves to the Cayman Islands where it will be able to continue crafting derivative investments for which no valuation estimate can be accurately derived and for which the risk is incalculable, there is no benefit to the U.S. or the global economy.  In fact America’s position will be weakened.

Such an outcome must not occur, and I don’t believe it will.  If the legislation can keep its focus achieving the big goals, the relatively smaller goals—like keeping Wall Street as the center of financial innovation—will take care of themselves.

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