The banks' global arms race

Robert Reich, Professor of Public Policy at the University of California at Berkeley, has written something that could just as easily have come from TJN.

"Squadrons of lawyers and lobbyists are now pressing the Treasury, Comptroller of the Currency, SEC, and the Fed to go even easier on [Wall] Street. Their main argument is if regulations are too tight, the big banks will be less competitive internationally. Translated: They’ll move more of their business to London and Frankfurt, where regulations will be looser.

Meanwhile, Wall Street is warning Europeans that if their financial regulations are too tight, the big banks will move more of their business to the US, where regulations will be looser."

and he notes the words of Lloyd Blankfein, CEO of Goldman Sachs, who issued “a clear warning that the bank could shift its operations around the world if the regulatory crackdown becomes too tough."

It is a shame he didn't use the word "tax haven." Because this is exactly what these centres are, and this race to the bottom on financial regulation is at the heart of what is wrong with the global economic system today.

Some people call this process "regulatory competition." We might call it a regulatory arms race, run by the big arms dealers.