by Calculated Risk on 3/15/2009 10:22:00 AM

From The Times: Lord Turner demands global crackdown on bank excess

A BLUEPRINT for international financial regulation will be unveiled this week, leading the way for a global crackdown on the shadow banking system and high-risk trading strategies.

Lord Turner, chairman of the Financial Services Authority (FSA), will publish a paper on Wednesday outlining the regulator’s responses to the global financial crisis.

The proposals are expected to form the cornerstone of international efforts to overhaul the global regulatory system ... [Turner] wants more co-ordination between regulators and central banks to spot signs that economies are overheating.

He will launch a clampdown on the shadow-banking system — including the off-balance-sheet funding vehicles set up by banks in tax havens.

Further regulation of hedge funds is expected ...

Banks that offer big bonuses to traders who deal in risky assets could be obliged to hold more capital. Retail banks, which hold savers’ money, could also face restrictions on the investments they make through their treasury operations.
...
“You are going to see a massive change in the supervisory system. It’s going to include tax havens and institutions where it didn’t before,” [Prime Minister Gordon Brown] said.