And more regulation is like doing nought.
The current suggestion is that oversight of the Libor setting process be handed over to the FSA (Financial Services Authority – the British equivalent of the SEC). This was suggested, oddly enough, by the head of the FSA, Mr Mark Wheatley.
He also proposed that over 100 of the Libor rates linked to trades that don’t happen frequently enough (ie. daily) be scrapped. Which is, you know, really useful when the market wants those rates as a reference point, EVEN if they don’t necessarily trade in them.
And also, given that there are only 150 rates out there, this really cuts Mr Wheatley’s work out for him. And by that, I mean it really cuts his work down for him. To overseeing around 20 rates. Which, to me, sounds like the real problem here was that the BBA was trying to do too much. The poor things.
He also wants new super-sanctioning powers and the ability to force non-cooperating banks to cooperate.
Here is a picture of Mark Wheatley:
Here is a picture of Superman:
Mr Wheatley is just a simple regulator trying to save the world.
Here’s a thought: why don’t you just let the market decide for itself? If you think that you can do better than Libor, create a new competitive measure. Base it on market-traded credit-default swaps and implied credit ratings and all manner of technical awesomeness.
Give the market a choice, and let that competition drive efficiency, transparency, and all those good things that you’re trying to achieve. Much like many airlines make for efficient ticket prices.
Instead of asking us to trust in a regulator when so many regulators before you have failed so ridiculously.