Downsizing of finance underway

By Martin Hutchinson

A committee led by Gerald Corrigan, former vice chairman of the Federal Reserve Bank of New York, produced a report that promises to revolutionize finance. It proposes to place severe limits on derivatives, bringing them under the ambit of regulators and protecting retail investors from their more egregious products.
His report met with a favorable reception from the major international banks; not surprising as it shuts the stable door after horses have bolted to the extent of about US$500 billion of losses and counting. For investor and market protection, it doesn't go far enough. However it does represent the first institutional step towards a goal that all non-financiers should welcome: the downsizing of finance in the US and global economy.