Investors have already paid price of regulation

From Mr Kurt N. Schacht. Sir, We read with interest, and curiosity, Larry Tabb's joining the chorus of caution about bank regulation in his article "Investors will pay price of bank regulation" (Insight, March 7). Aside from the fact these institutions need little help in peddling their own commercial interests, Mr Tabb fails to account for two important considerations in the balance between crisis prevention and the regulatory asphyxiation he seems to fear. First, we all understand the danger of overzealous responses to the crisis. But in fact this so-called "response", which has bankers and their lobby firms pulling the fire alarm, has been nothing short of underwhelming, no matter on which side of the Atlantic you reside. European regulatory reforms and the range of US counterparts under Dodd-Frank are stalled in the quagmire where political and commercial interests battle it out. Meanwhile, systemic risk oversight plans are catatonic and the regulation of over-the-counter derivatives deferred for months. Most important, the regulators assigned guard duty over all these measures are withering on the budget vine. Hardly a legislative tsunami. Second, while Mr Tabb notes the residual public anger over the taxpayer-funded lifesaver, in doing so he drastically underemphasises both its implications and its costs. It is best to forgive what you cannot change but it is folly to forget its ramifications. This is no longer about extracting penalty from the sector as they and Tabb may have us believe. It is about prevention at a cost that will be a pittance in comparison to what was destroyed by this industry. By raising the "price of regulation" it begs the comparison with the cost of failed regulation. Old habits are hard to change and it is fully expected that industry representatives will seldom argue for what is best for investors or the protection of markets. Rather, they will swarm at any hint of new rules or reduced commercial opportunity. It is their job. And it is a job made even easier in an election year. To all our legislative leaders: while you have your hand out for campaign money, remember that investors have already paid dearly for the transgressions of the financial firms writing you the cheque. While their apology may have assuaged you and Mr Tabb, investors around the world would prefer some concrete reforms. Kurt N. Schacht, Managing Director, CFA Institute, New York, NY, US LETTERS