Getting regulation right

Given the rise in the number of cases that fall between various regulators, Sebi's not knowing about Sahara's fund-raising being the latest example, it's not surprising that all countries are trying to evolve an architecture that allows a holistic look at organisations that are both too-big-to-fail as well as too-big-to-bail. Credit risks in banks, for instance, also include insurance/pension risks and, as we saw in the case of US banks and insurance firms, no one had any idea about the size of counter-party and off balance sheet risks that had piled up—that is the reason why, for a very long time, estimates of the size of the sub-prime crisis kept rising each month. Different countries are handling this differently.

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