Of World Cup Commentary and Financial Reform...

I have been most impressed by the consistent cordiality of the BBC broadcasters who are bringing the World Cup games to America.  A defender who has been behind the rush all day is said to be "suspect on crosses."  North Korea's 7-0 loss to Portugal evidenced "a lackluster performance."  And, of course, the British and American efforts were "found wanting" in upset losses over the weekend.    

In the spirit of such dignified euphemism and old world gentility, I hereby summarize three of the main compromises about to be signed into law as domestic financial reform:

"Lackluster"

Remember when hedge funds and private equity firms were thought to be unregulated beasts populating the dangerous and new "shadow banking system"?  Well, not so much anymore.  Wall Street titans will still be able to invest up to 3% of equity in such entities. 

"Found Wanting"

Although cited as the primary folly in the economic crisis, derivatives ultimately were characterized as just too much darn fun to place squarely on the regulator's hit list.  Thus, the "common and relatively safe derivatives" (NYT, 6/25/2010) will still be permitted (funny, I thought credit default swaps were thought to be common and relatively safe, at least until 2007?).   

"Suspect"

Net capital requirements, of course, are the chief means of limiting suicidal risk.  But, as Congress has edified, one man's suicidal speculation is another's entrepreneurial nature.  Thus, the largest entities will be given 60 months to comply with the new limits on their coffers (which of course provides much time for repeal/modification of these limits).

Overall, let's hope these Congressional games need not take place every four years.

---JSC, 6/28/10