International Banking Law Crackdown: ACT Director Admits No one Knows it All!

Financial institutions worldwide are bracing themselves for a crackdown on banking regulations aimed at tackling the global financial crisis and preventing any future recurrences. 

In the US Barack Obama’s government is striving to keep up the momentum on its program of reforms by pushing through its ‘Dodd-Frank’ program. Here in the UK banks are expecting the Independent Commission on Banking to deliver its final report on banking reform next month.  The capital and liquidity reform package known as Basel III has been endorsed by the Basel Committee and is likely to be phased in over a 7-8 year timescale.

The finance industry is no shrinking violet and has not been backward in coming forward in voicing its criticism of the new, stricter banking regulations.

It has been quick to point out that the reforms may hit everyone in the pocket, especially small companies who wish to borrow to expand their businesses.  Dire warnings about any future financial recovery being crippled by overly-strict regulations are commonplace.

Are the warnings true? So much has been written, so many different regulatory bodies exist, so many financial systems and economies, and so many legal frameworks in divers countries; it’s not easy to keep on top of developments and maintain the bigger picture.  To read all the legal documentation, follow all the relevant news articles, websites and blog postings is truly a full-time job! What is the true impact of reform on the global economy? How does it all fit together? What is the bigger picture?

So I was interested to read a recent blog posting by John Grout, Policy and Technical Director of the Association of Corporate Treasurers and more than qualified to express an opinion.  His take on the situation in a blog posting of June 2011 can be summed up as

 “It’s Official: Noone Knows”.

http://www.treasurers.org/node/7050

How very refreshing to find someone honest enough to own up to that!  He says that when ACT comments on proposals for reform they DO WORRY about the bigger picture:-

“How will the new or changed drafting play out in the real world when it interacts with all the other regulation, new and old, and the legal and commercial structures in the real economy that the financial sector services?”

Excellent point, Mr Grout, we will be keeping an eye on your informative and authoritative blog postings over the coming months.