The subprime accountability deficit and the obstacles to international standards setting

Global Governance

Volumn 15, Issue 1, 2009, Pages 23-28

  Singer, David Andrew ^a  

^a MASSACHUSETTS INSTITUTE OF TECHNOLOGY   (United States)

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EID: 62449224803     PISSN: 10752846     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (16)

1. To be sure, international regulatory bodies have already begun to respond to the crisis. The Basel Committee and IOSCO, for example, are developing new "Guidelines for Computing Capital for Incremental Risk in the Trading Book" to address weaknesses in the capital cushion as it relates to banks' trading positions. The Basel Committee is also tweaking its recommendations for making prudent valuations of any positions subject to market risk and attempting to address the issue of illiquidity. These responses are useful and conscientious - I certainly do not mean to malign them - and indeed they demonstrate how existing international institutions can facilitate ongoing dialogue and negotiation. But, as I discuss in this article, it seems unlikely that any new international standards will emerge from these discussions.
2. See Singer, Regulating Capital;
3. and Singer, "Capital Rules: The Domestic Politics of International Regulatory Harmonization," International Organization 58, no. 3 (2004): 531-565.
4. Data on bank failures in this paragraph are from FDIC, "A Brief History of Deposit Insurance in the United States," International Conference on Deposit Insurance, Washington, DC, 1998.
5. Singer, "Capital Rules"; Singer Regulating Capital.
6. The legislation was the Banking Act of 1979.
7. Testimony of John Dugan before the Committee on Banking, Housing, and Urban Affairs, US Senate, 4 March 2008.
8. For a discussion of other fundamental causes of the crisis, see Robert Wade, "The First World Debt Crisis of 2007-2010 in Global Perspective," Challenge 51, no. 4 (2008):23-54.
9. On the influence of credit rating agencies, see Timothy Sinclair, The New Masters of Capital (Ithaca: Cornell University Press, 2005).
10. See, for example, Michael R. King and Timothy J. Sinclair, "Private Actors and Public Policy: A Requiem for the New Basel Capital Accord," International Political Science Review 24, no. 3 (2003): 345-362;
11. Singer, Regulating Capital;
12. and Duncan Wood, Governing Global Banking (Aldershot: Ashgate, 2005).
13. On the problem of national and/or international fragmentation of regulatory authority, see Walter Mattli and Tim Buthe, "Setting International Standards: Technological Rationality or Primacy of Power?" World Politics 56, no. 1 (2003): 1-42;
14. Louis Pauly, "Financial Crisis Management in Europe and Beyond," Contributions to Political Economy 27 (2008): 73-89;
15. and Geoffrey Underhill, "Private Markets and Public Responsibility in a Global System: Conflict and Cooperation in Transnational Banking and Securities Regulation," in Geoffrey Underhill, ed., The New World Order in International Finance (New York: St. Martin's Press, 1997), pp. 17-49.
16. Regulatory consolidation within the central bank (i.e., granting the Fed the authority to regulate investment and insurance firms) is a very different proposition from consolidation outside the central bank, as the UK did with the creation of the FSA in the late 1990s. On the inflationary consequences of consolidating regulatory authority within the central bank throughout the developed world, see Mark Copelo-vitch and David Andrew Singer, "Financial Regulation, Monetary Policy, and Inflation in the Industrialized World," Journal of Politics 70, no. 3 (2008): 663-680.