What new banking regulations would you like to see?

[junketman]

We all should be in agreement that the global economic crisis and also our own national banking crisis was caused by very poor regulation and letting the banks essentially do as they please.

We need to make stricter our banking regulations, and governments rather than the regulators who are too close to bankers should take the lead on this. An independent banking regulator, independent of government that is, is very bad since there is no democratic oversight or input from the people in overseeing how banks do their business and ensure they are not engaged in corrupt practices.

At the moment, I think you can lend 10 euros for every 1 euro on deposit. This must be reduced to 5 euro per 1 euro on deposit. The banks have lent out way too much money and have exposed themselves badly so that if some people default, there is a danger of not enough money being available to repay depositors, especially if a bank such as Anglo is in danger of going under.

A second regulation is that all loans over 10 million should be approved by the regulator, this prevents the kind of dodgy dealings that Anglo were involved in.

Thirdly, 3/4s of banking profits should not be paid out but should be maintained in a fund within the bank to pay depositors in case the bank should ever go under.

Anglo was involved at the higher level in very questionable practices and these practices should not be repeated and its up to government and regulator to enforce this.

[Pauli]

Mandatory sentencing for fraud. No exceptions.

[draiocht23]

Stocks - not of the banking variety but the medieval torture devices - and loads of rotten fruit.

[Gimpanzee]

I'd just like to see the ones that are supposed to be in place enforced.

Tax was a joke until about 10 years ago and then Revenue went from the default public service mode of doing shag all (remember the ' there's no pot of gold of unpaid taxes out there' claims) to being very proactive and have done a great job since.

Which is why it is at least some way reassuring to see Frank Daly who oversaw all that change now on the Anglo board.

[Outlander]

Something needs to be done to prevent future speculative property bubbles.

Possilble options:

Mortages linked to say 10 times the possible annual rent? - rental assessments to be fair and independent. This would link the mortgage to the real value of the property, and not to the speculated future value.

For private domestic mortgages limit the bank's lien only to the property - if they loan more than the property is worth then they take the hit.

[constitutionus]

I'd just like to see the ones that are supposed to be in place enforced.

Tax was a joke until about 10 years ago and then Revenue went from the default public service mode of doing shag all (remember the ' there's no pot of gold of unpaid taxes out there' claims) to being very proactive and have done a great job since.

Which is why it is at least some way reassuring to see Frank Daly who oversaw all that change now on the Anglo board.

2nded.

the problem here is people in the regulators we're actively encouraged not to do their jobs as gov policy

combine arsing about with JAIL time and you'd have a system that works.

[zakalwe1]

1. ban banks from securitising loan portfolios.
2. ban use of derivatives outside plain vanilla interest rate and fx swaps.
3. reintroduce glass-steagal act to prevent cross investment.
4. increase the minimum liquidity requirements.
5. regulate the forms of security put up on loans. i.e. property based security for property based loan.
5. scrap current commission structure on loans written.

[seabhcan]

Something needs to be done to prevent future speculative property bubbles.

Possilble options:

Mortages linked to say 10 times the possible annual rent? - rental assessments to be fair and independent. This would link the mortgage to the real value of the property, and not to the speculated future value.

For private domestic mortgages limit the bank's lien only to the property - if they loan more than the property is worth then they take the hit.

Property prices are already linked to rent - and that is partly what has caused the bubble.

Why can't housing be included in the inflation index? That would force the government to prevent crazy house price inflation.

[cyberianpan]

I'd just like to see the ones that are supposed to be in place enforced.

Tax was a joke until about 10 years ago and then Revenue went from the default public service mode of doing shag all (remember the ' there's no pot of gold of unpaid taxes out there' claims) to being very proactive and have done a great job since.

Which is why it is at least some way reassuring to see Frank Daly who oversaw all that change now on the Anglo board.

Indeed. I'd add in two extra things I 'd like to see from regulation:

Increased Transparency

• Increased self disclosure on a wide array of topics
• New open markets for odd instruments (e.g. MBS, CDOs and indeed review "corporate banking" where their deals verged between loans & equity)
• State paper type rules: whereby top level stuff , minutes, management reports- becomes available after say 3 years

Investigation
Modern banks are very complex at the operational level. The current generation of auditors & regulatory staff are "diggers" - they don't have proper investigative skills. Instead they are much better at figuring out legal requirements & obligations (whilst the operations staff hide lorryloads from them). This isn't quite something you can legislate for, and as we saw with the Regulator even when Anglo's dodgy loans were discovered - nothing was done. The only answer here is a really strong regulator ...

And two from the shareholders/board:
Pay
Anyone earning over say €150k: that they get 16% of the extra, each year, over the next 6 years (when the true effects of their deals become apparent).
Investigation
That the non executive directors get a small, independent investigation staff.

These last two are ones for the shareholders to fight - but the government , as a shareholder, could easily push them through now.

cYp

[cHeal]

Abolish regulation, instead replace it with a mandatory national insurance scheme. The banks regulate their own transactions by giving them a risk category. The premium they pay on each transaction is based on the risk category into which the transaction falls (thus risky transactions cost more to insure). When debt turns bad, the national insurance scheme looks at the transaction risk given by the banks and if it is not inline with the actual risk of the debt, then no pay out is made (same as any insurance scheme), but if the risk was accessed correctly by the bank, the state covers the cost of the bad debt.

Thus the state makes money in the good times, to help cover cost in the bad times. It is now obvious the private insurance on these institutions is not sufficient and so should be done away with. This will generate money for the government and make regulation of the banks self sustaining, it will also give the government more control over a bubble economy as the government can use the insurance costs to deter high risk groups from taking mortgages, thus reducing the chances of another sub prime market.