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Costs of current regulatory reforms could reach $200bn in first year

Wednesday 12 May 2010 - by Iain Anderson

Regulatory reform in US markets is heading in the right direction but the current package of reforms might cost the industry up to $200bn (€151bn) in the first year, according to BNY Mellon Chief Executive Robert Kelly.

Speaking at the Global Financial Forum in New York on 26 April, Kelly said: “I agree with around 80 per cent of the package but we must ensure that reforms do not result in costs to the system which limit GDP growth and employment.

“We must ask the question if this results in lower profitability, lower levels of lending and therefore lower GDP if this is a price worth paying.â€

He said the current package of planned US reforms, including creating a systemic risk council and a new resolution authority, were the right approach to lawmaking from policymakers.

Kelly’s main concerns include the plans for derivatives market reforms. He said: “Trading in most derivatives, other than credit default swaps, has not been a problem for the past two years. There is no sense in fixing stuff that is not a problem.â€



He said there needs to be significant reform to the US mortgage industry and called for the US Government to exit from the mortgage market. He said: “We need to re-design the mortgage industry in a way which removes the Federal Government from the business.â€


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