The ERM Current™

Last week, the U.S. hosted a meeting of the G-7 finance ministers in Washington D.C. to discuss the current financial crisis.  In the meeting, Treasury Secretary Tim Geithner and the other ministers committed to addressing the recommendations from the recent G-20 Summit in London.  Here is what they had to say.

We also discussed regulatory reform in our countries and at the international level and will implement swiftly the commitments made in London.  We underscored the imperative of: strengthening our national efforts to address systemic risks; extending the perimeter of regulation to include all systemically important institutions, markets, and instruments; ensuring sound regulation, adequate capitalization of financial institutions, and strengthened risk management practices; enhancing transparency; reinforcing international collaboration; improving accounting standards on valuation and provisioning; and bolstering market integrity. 

These are certainly bold words and time will tell if they are met with bold actions.  For the sake of the world economy, let’s hope so.

As expected, the U.S. government is making its move to reform regulatory oversight and strengthen risk management practices at major U.S. financial institutions.   More will be required from these institutions, both in terms of capital as well as compliance and control.  Here is what the Wall Street Journal reported yesterday about U.S. Treasury Secretary Tim Geithner’s plans.

Mr. Geithner is expected to call for a strict and consistent set of regulations for large firms, as well as more power for the government to monitor emerging risks to the economy. The new rules will likely require financial institutions to hold more capital as a buffer against losses and will bolster risk-management standards. All told, the proposals would mean significant expansions of power for the Treasury, Federal Reserve and other regulators.

Preparations for these sweeping changes must begin now.  Is your company ready?  Visit www.WheelhouseAdvisors.com to learn more about how we can help.

The U.S. Treasury is having trouble staffing its team at the very height of the current economic maelstrom according to an article in the New York Times.  Last week, the nominee for the number two position at the Treasury withdrew herself from consideration while many positions remain unfilled.  The lack of qualified personnel is beginning to impede the progress of major initiatives such as the anticipated regulatory reform blueprint that was slated to be unveiled at the upcoming G-20 summit in London.  Here is what the Times reported yesterday.

Administration officials say they are postponing their plan to produce a detailed road map for overhauling the nation’s financial regulatory system by April, in time for the Group of 20 meeting in London. Though officials say they will still develop basic principles in time for the meeting, the plan will not include much detail.

Lack of detail creates a great deal of uncertainty.  Uncertainty is exactly what our fragile financial markets cannot support in times like these.  Let’s hope that Secretary Geithner can quickly staff his team to begin filling in the gaps in his plans.