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Postcard from America: Policymakers on Capitol Hill are quite happy with themselves

Tuesday 13 July 2010 - by Iain Anderson

The last time I penned this Postcard from America for Global Financial Strategy in late April, the whole process of financial regulatory reform was only just getting underway in the US after months of bitter debate on healthcare.

Now as I write, the ink is barely dry on the 2,500 pages of detailed legislation. Much of the comment in the US makes the point this has become an increasingly complex set of reforms designed to be a ‘catch all’ across both retail and institutional markets – with investor protection sitting alongside derivatives reform.

The US has also backed away from any attempt at Glass Steagall, preferring to limit the activities of the investment banks trading on the own book. Will the EU do the same? The signs indicate not.

Given the considerable amount of political time and capital that has been expounded on the detail, I don’t think we will see US policymakers want to revisit this process for some time.

However, EU policymakers, who have now clearly been leapfrogged by America in the process of reform in the past couple of months, are likely to want to catch up.


With the US legislation now on the table, the EU is likely to want to take the opportunity to go further by comparison. In my latest conversations in Washington, all the interest from policymakers was just what will Brussels do next on financial reform.

The recent G20 showed signs of nascent protectionism on both sides of the Atlantic – as economies battle for national advantage out of the recession. And global financial reform appears increasingly likely to be a casualty.
If the Alternative Investment Fund Management Directive is anything to go by, US policymakers may not be that happy for long.
Iain Anderson is director at Cicero Consulting.


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