Banking regulation with teeth now required

What are possibly the first real co-ordinated moves in laying a foundation for a new world financial system came at a meeting of the EU"s big economic powers in Berlin on Sunday. It is way too early to call it a turning point in the crisis that has paralysed the global banking system, but the agreement reached in Germany at the weekend must be regarded as a step in the right direction. Last November, the G20 countries set in motion an action plan to overhaul global financial markets. Following on from this, on Sunday the leaders of Germany, France, Italy, Britain, Spain and the Netherlands agreed on the absolute necessity for much tighter regulation of financial markets and products. This underscores the conviction that all financial markets and products be subjected to appropriate oversight without exception. This policy response to the banking crisis and economic meltdown needs to be both comprehensive and forceful and it needs to have teeth. Weak and ineffectual regulation has as much been the root cause of this crisis as the scandalous malpractices of the banking sector unearthed in this country. Nowehere has the collective failure of proper regulation been more evident than in Ireland, where the former financial regulator failed to raise any red flags over the goings-on at Anglo Irish Bank, even though, it is claimed, he was aware of the so-called balance sheet management where billions of euro was moved to Anglo from Irish Life & Permanent in an effort to artificially boost the value of the former"s deposit base. The seething anger of the public is becoming more evident by the day over how our boom turned to dust in the space of just 18 months, with all the consequences that has brought in terms of business failures and joblessness. People are feeling very vulnerable and apprehensive about the future, about their jobs, about their savings, their investments and pensions, about the roof over their head, where the next mortgage payment is going to come from and how the next grocery bill is going to be paid. Sunday"s large march in Dublin, which saw over 100,000 public servants take to the streets, demonstrates that citizens are prepared to march in large numbers to vent their anger and frustration. As has been seen in other European capitals of late, there is a fine line between peaceful marches and civil unrest and unless people are given some hope that the massive issues that confront this country are being tackled in a coherent fashion by the Government, the faint whiff of revolution will linger as angry marches become ever larger and voices ever more strident. Fixing this mess will require guts and imagination and a substantial amount of taxpayers" money. People, however, need to believe in something - they need to see positive and decisive leadership at all levels and they require confidence and determination to pick themselves up and get through these present travails. Apart from the imposition of the unpopular pension levy on public servants, this Government has not taken any decisive measures which would lead people to believe it knows how to surmount the difficulties it faces. Quite the contrary, the coalition appears all at sea as it attempts to come to terms with the enormity of the task it faces. The realisation is beginning to sink in that this is no 'blip" or 'adjustment" that economies go through from time to time. What is happening in the world today is a profound and transformational change that will affect every society on the planet in one way or another. Rebuilding confidence in our banking and financial system is an absolute prerequisite to anything else being fixed. That means sweeping changes at senior management levels and in the boardrooms of banks so that the new guard taking over are not tainted in any way by what has gone before. The regulatory system also needs to be scrutinised and completely overhauled, for it has been a complete failure to date, not only here but everywhere. Only when these matters have been attended to, can there be hope of economic recovery.