Why waste a good crisis?

This week, London Business School celebrates Worldwide Alumni Celebration 2009. A series of lectures and events are held all over the world. In London, a lecture in Lloyds iconic building fired off a series of events - "Where does it go from here?"

The most interesting idea I personally thought was : Why waste a good crisis?
The panel spoke about how we can see the policy makers doing the "easy-but-irrelvant" bits such as targeting the tax haven status of some economies, or pursue the "crowd-pleaser" bits of slamming bonuses and hedge fund/private equity regulations.

However, the big-big issues have not been formally addressed.
- How should banks be sized?
- Taxing by size to discourage too big to fail financial institutions
- Reviewing the Glass-Steagall act
- Tobin Tax
- Living Will
- Ratings agencies
- Cross border issues

Macro prudential regulations have also not been openly addressed. Spain managed to largely avoid the US subprime crisis by having a countercyclical capital ratio which looks increasingly likely to be adopted in the rest of Europe, but the currently prescription may get nowhere near high enough for it to be effective.

So it seems like there are many thoughts to take away from this week of Alumni celebrations in London Business School, but one thing is for sure, the regulators have a lot more work to be done before this crisis is over.

Eric Tan,
London