Is a new regulatory framework starting to come together?

http://www.businessspectator.com.au/bs.nsf/Article/The-end-of-shadow-banking-$pd20090327-QHSUJ?OpenDocument&src=sph

http://www.economist.com/finance/displayStory.cfm?story_id=13394576&source=features_box_main

http://money.cnn.com/2009/03/26/news/geithner.house.fortune/index.htm?postversion=2009032611

Hmmm...oversight. Pretty much every type of investment operation has to report to the authorities, and if it is decided that it is too leveraged or systemically important, it would get referred to some new "systemic risk" entity.

Which begs the question: would this new entity be any better at using the information it gets than the authorities were over the past few years? It's not like Bear Stearns, Lehman Brothers or the other banks weren't being quite open with the regulators about what they were doing.

And we're seeing a move towards centralised clearing for OTC derivatives. I can't think of a better way to do it, but I'm worried about a potential reduction in flexibility. Maybe it'll come down to the OTCs being replaced with collections of simpler, centrally cleared or even exchange-traded instruments.

Watch this space. Closely.