Of course they have failed in large widths

That is important that the strengthening of regulations is of no use to resolve financial and banking crisis current at best will avoid the next politicians multiply injunctions so as to avert the collapse of markets. And everything passes since the period prompt on bankers, the limitation of their wages to the prohibition against pure and simple of the short selling of banks...

The problem with the regulation is that it can be counterproductive as shown by the very heavy American Act Sarbanes-Oxley, which cost the companies fortunes (and reported to the firms of consultants) , or even powerless after all, it is not "hedge funds" (hedge funds) that are now explode the financial system, but the banks, of which some were closely regulated. Then, of course, must be put an end to the period of nearly thirty years of often ideological financial deregulation. While bankers deserve a round of regulatory screw after years of inconsistency. The construction of the regulation is vast, but try to see clearer between some true and false leads.

Limit wages

bankers

Bankers deserve not the annual bonus in tens of millions of dollars, but set a limit by law is possible and desirable The risk of circumvention (benefits in kind...) and a CAP would deprive shareholders of a Bank of flexibilities in international competition. More efficient would be to push the banks to align the wages of their employees but not on the profits of the year, which encourages them to take risks, but on the economic performance of all of the institution in the longer term. To do this, one solution could be that the control function of the risk of a Bank, which is already out very strong in the last months of turbulence, casts an eye on salaries of managers and traders. Then, as suggested in our professors Augustin Landier and David Thesmar columns, "risk control function could refer not to the branch, but the Board of Directors, directly and it may be with powers of investigation to trace information" ("Les Echos" from October 2, 2008).

Prohibit short sales

This is not because it has banned short selling (i.e. betting on the decline of an action) of the securities of financial institutions that it had arrested the hecatomb of banks, as it has been able to see these days in Europe. In contrast, almost all academic studies show that short sales improve liquidity and reduce the volatility of the markets (today, betting on the volatility of markets earn fortunes). Delete them is counterproductive, as well as being an unfair rules of the game in game change.

Make products

more transparent financial

Financial innovation in recent years has not benefited to the bankers. It stimulated the growth of the economy by facilitating the access to financing wrong them. Instead of choking her, several more interesting tracks are today referred to make it less dangerous. For Alistair Milne, Cass Business School in London, a solution might be to force financial institutions to publish prices and details of their transactions on structured credit products in the same way that the price of a transaction on action must be public almost immediately. This would allow much more scrutiny of off-market transactions, and therefore the search for an optimal price to pay for a risk which would be more transparent. Similarly, the financial authorities must encourage transactions with derivatives in regulated markets, whereas today ' hui three-quarters are wishes at will. They are working and have partly succeeded on "credit default swaps", these contracts of insurance against the failure of a debt.

Reforming the

rating agencies

Rating agencies are the preferred expiatory victim of French politicians. Of course, they have failed in large widths. But the truth is that the banks structuring complex financial products (and those who bought) are hidden behind the rampart of the ratings of these agencies in full knowledge of the dangerousness of these products. If there is reform in this area, it must be in the sense of accountability to investors rather than a reinforcement of controls on the agencies, which must be nothing other than to issue opinions, fallible and considered as such.

Empowering regulators

Finally, if do not bury the financial sector under regulatory constraints, it is clear that must be given more resources, including personnel, to the authorities and that they should better coordinate at the international level. Regulators must be able to better anticipate the future, and not be limited to record what happened. "They must also work in close collaboration with the central banks, the France being rather an example to follow in this matter," said a head of the risk of a major French Bank. If they were closer to markets, especially in the United States, they could impose cushions in thicker own funds to the ex-banques of investment such as Goldman Sachs and Lehman Brothers. They would also better appreciate the perverse effects of "mark-to-market", the obligation on banks to save their assets at market value. Similarly, they might reflect today on the oligopolistic consequences of accelerated banking concentration which operates currently. Public budgets are not expandable but if there is a time during which the company is willing to grant more resources to regulators, it is that we live...