Group of 30 report could portend regulatory changes

A Group of 30 report, whose co-author is Obama adviser Paul Volcker, calls for limiting the size of banks, prohibiting large banks from engaging in hedge funds, limiting their proprietary trading, and making them retain pieces of CDOs they underwrite. Large insurance companies and brokerage firms need oversight by an appropriate regulator, the report said. Money markets should be reogranized as special banks with government insurance, with no more "amortized cost pricing," meaning no more stable NAVs.

The report called for higher capital requirements, " given the demonstrable limitations of even the most advanced tools for estimating firmwide risk."

And regulators will need good luck to ensure this recommendation: "In all cases, countries should explicitly reaffirm the insulation of national regulatory authorities from political and market pressures."

A Washington Post story is here.