I would love to be able to support the criminal intent version, because then it would be so much easier to find the solutions. Unfortunately that is not the case which is exactly why we are not making a lot of progress within the regulatory reform process… you see they are still captured by their own paradigms.

And by the way, if we really suspect any criminal intent action, then of course we would also have to include among the criminals those who kept silence about it all, and which of course does even include, as far as I know, one of the owners of this blog.

But of course the above does not mean for a second there was not a lot of undue lobbying going on… why should the financial sector be the exception?

If we are not careful in understanding what happened we will only dig us even deeper in the hole we’re in.

Cheers

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So far, Roger contribution has been to compare Obama to a wookie who helps save the good guys from the evil death star. Oh yes, and to assert that the Stars Wars franchise is unknown outside of the U.S. despite billions in foreign sales and the widespread availability of movie theaters and DVD players.

Having followed their discussion and work for a long time, I am sincerely convinced that the Basel Committee captured itself, in the trap of incestuous thinking processes.

“The Basel Committee was established by the central-bank Governors of the Group of Ten countries at the end of 1974. The Committee’s members come from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. Countries are represented by their central bank and also by the authority with formal responsibility for the prudential supervision of banking business where this is not the central bank.

The Committee does not possess any formal supranational supervisory authority, and its conclusions do not, and were never intended to, have legal force. Rather, it formulates broad supervisory standards and guidelines and recommends statements of best practice in the expectation that individual authorities will take steps to implement them through detailed arrangements – statutory or otherwise – which are best suited to their own national systems. In this way, the Committee encourages convergence towards common approaches and common standards without attempting detailed harmonization of member countries’ supervisory techniques.

The Committee reports to the central bank Governors and Heads of Supervision of its member countries. It seeks their endorsement for its major initiatives. These decisions cover a very wide range of financial issues. One important objective of the Committee’s work has been to close gaps in international supervisory coverage in pursuit of two basic principles: that no foreign banking establishment should escape supervision; and that supervision should be adequate. To achieve this, the Committee has issued a long series of documents since 1975.

In 1988, the Committee decided to introduce a capital measurement system commonly referred to as the Basel Capital Accord. This system provided for the implementation of a credit risk measurement framework with a minimum capital standard of 8% by end-1992. Since 1988, this framework has been progressively introduced not only in member countries but also in virtually all other countries with internationally active banks.

In June 1999, the Committee issued a proposal for a revised Capital Adequacy Framework. The proposed capital framework consists of three pillars: minimum capital requirements, which seek to refine the standardized rules set forth in the 1988 Accord; supervisory review of an institution’s internal assessment process and capital adequacy; and effective use of disclosure to strengthen market discipline as a complement to supervisory efforts. Following extensive interaction with banks, industry groups and supervisory authorities that are not members of the Committee, the revised framework was issued on 26 June 2004. This text serves as a basis for national rule-making and for banks to complete their preparations for the new framework’s implementation.”