The errors of major financial institutions on Wall Street and abroad have brought an end to the era of financial globalization and may bring about a new regime characterized by more narrow, nationalistic interests.
So says New York Times financial columnist Floyd Norris, who writes that there is no international consensus as to what to do next in terms of regulations.
"Instead, countries are looking out for themselves, or simply quarreling," writes Norris on the newspaper's blog.
"Recriminations are in fashion, whether against regulators who allowed bailed-out bankers to get big pay packages or against financial institutions."
According to Norris, it is difficult to reach a consensus as to what to do in terms of a long-term government response even at the national level.
In England, for instance, "the Labour government has put together a package of regulatory reforms that the Conservative opposition vows to repeal if it wins the next election, as is widely expected," writes Norris.
"It can be seen in Washington where the Federal Reserve and the Treasury are being pilloried in Congress for actions that were necessary to avert a collapse of the global economy last fall."
A new report by the Institute of International Finance, a group of the world’s largest financial institutions pleads for international cooperation and expresses fears in about national efforts to apply differing standards for local affiliates of international banks.
Though nations are not cooperating on new rules of the road for the financial markets, the world’s banking networks are still globally interconnected.
Plans to put a "ring fence" around the assets of, for example, the assets of British subsidiaries of foreign financial firms, are worrying, noted Norris.
"Other countries have indicated they may follow suit," he writes.
One of the reasons for a refusal to reach a deal on new international regulations may well be the fact that many financial stocks are recovering — and no one wants to kill a recovery in finance with onerous rules.
Meanwhile, Fed Chairman Ben Bernanke told an audience over the weekend that politicizing the monetary authority would not serve the best interests of Americans.
A measure before Congress would open the Fed to scrutiny by the Government Accountability Office.
"I don't think the American people want Congress running monetary policy. That's exactly what (the bill) would do," he said.
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