US Leapfrogs Sluggish EU on Financial Reform

The US approved a financial reform law that could nudge the rest of the world, especially Europe, into preventing another financial meltdown. In an interconnected system, fast action on regulating complex securities and speculation can set global patterns into play, as noted by Wolfgang Reuter: “Americans have established a benchmark. European banks that do business in the United States will now have to adhere to the standards Washington sets, which strongly limits the possibilities for European governments and the European Union to enact other rules.” The law aims to protect consumers, by separating commercial and investment divisions, taxing banks to create rescue funds, providing orderly closure of troubled banks and prohibiting phone trading in derivatives. Bogged down with procedures, the European Commission failed to rally its members on reform. Decisive steps on reform by the world’s largest financial market could deliver certainty and stabilize global markets. – YaleGlobal