Given that the likes of Goldman Sachs, Citigroup, Lehman Bros, Morgan Stanley, JP Morgan and Merrill Lynch already dominate our broking industry here (along with European giants, UBS, Credit Suisse and Deutsche Bank), you'd have to wonder what Mr. Rudd's announcement was really about.
That's why the changes proposed in the US (and to be announced tonight, our time, by the US Treasury) bear some understanding. They may not happen but they will be strongly debated.
Given that the lessen regulation of Wall Street, they are probably doomed to fail in the current climate of unease and distaste about the role investment banks and others have playe din the current set of problems.
The series of recommendations will radically reshape the regulation of the American financial services industry, giving broad new powers to the Federal Reserve to tackle systemic risk (as we have seen in recent weeks).
The move will come as there's growing impetus in the Congress for an overhaul of US financial regulation after the subprime mortgage scandal, the credit crisis and the 'rescue' of investment bank, Bear Stearns.
Newsagency reports say the US Treasury had been working on its proposals since early last year, in an effort to bolster US capital markets amid growing competition from overseas. But that competitive market drive has been overtaken by a desire to confront the issues raised by the current series of scandals and crises.
With the US in full-on election mode, there's been a rising interest in the issue among Congressional democrats eager to score points against the Republican Bush Administration for lax oversight and poor handling of the issue, especially the subprime mortgage crisis which is hurting thousands of US voters every week.
The Financial Times and Bloomberg both say that a main feature of Treasury's plan, which will take several years to implement, would give the Fed greater power to regulate financial firms such as investment banks and hedge funds, when their actions could pose a threat to the system. But that will not mean permanent regulation by the Fed of investment banks such as Goldman Sachs and Merrill Lynch.
A second and possibly just as vital feature of the plan reportedly involves a reduction in the role of the Securities and Exchange Commission.
That would bring the basis of regulation of securities markets more into line with those ideas in Britain and Australia where it is a set of principles that drive regulation of the markets, rather than black letter law, as the US has at the moments with the SEC.
A third part of the plan (and one that will be bitterly opposed by some in Congress and some in Government and industry) is the elimination of regulatory overlap by the consolidation of the various regulators that oversee commercial banks and thrifts.
There would also be a federal regulator for the insurance industry created, which would replace oversight by each of the 50 US states, and the creation of a Mortgage Origination Commission – to try and put a system of controls in place to prevent the reappearance of a subprime or some other type of mortgage based boom that slides through the regulatory cracks.
So in many respects the US is heading down our route of regulation.
But don't expect any real change because of the ability of the states and congressional lobbyists and others to frustrate it.
It doesn't tackle the blurred roles of credit rating agencies which was a prime cause of the explosive growth of CDOs and other derivatives which are now imploding as the same agencies reduce the ratings (Triple A for securities based on subprime mortgages!) and force write-downs and losses on investment banks and other investors and promoters.
The study sees the Fed given broader powers, especially in the area of market stability, and possibly less powers for bank supervision (which is what has happened here to the RBA and APRA).
In other areas, the Fed would get more power. The study proposes that the Fed become a "market stability regulator, with powers over insurance companies and securities firms with federal charters (which is very different than Australia).
Interestingly in view of the support the Fed has been providing to US financial markets and an extended range of financial groups in the past few months, the study suggests a distinction be made between the Fed's lender-of-last resort discount window to help banks meet short-term funding needs and market stability lending to help stave off severe funding shortages and panics.
Bloomberg said that market stability concept could see federally chartered insurance companies (as opposed to state-registered insurers and financial institutions, such as banks and credit unions) and financial institutions helped by the Fed's support.
Last week Japanese exports in February jumped by more than 8%, while imports were up 10%; later today the Bank of Japan releases its latest take on Japanese business confidence called the Tankan survey.
It will show that Japanese businesses are gloomy: which is an odd take given the booming export push, especially into Asia, Europe and major emerging markets like Brazil, China, Russia and India.
The things that will be making them gloomy will be weak consumption domestically (tough for retailers, wholesales and consumer products companies), the rising value of the yen and surging inflation, especially for oil and food products.
Figures out on Friday showed that Japan's consumer prices rose at the fastest pace in a decade last month, thanks to companies passing on higher oil and food costs.
Core consumer prices which exclude fruit, fish and vegetables, climbed 1% in the month, compared to a year earlier, and compared with a 0.8% rise in January. The gloomy tone to business thinking is bringing pressure for an interest rate cut, but the inflation figures will end that.
Another report on Friday showed that Japan's unemployment rate unexpectedly rose to 3.9% last month, the ratio of available jobs to applicants fell to a two year low and household spending was unchanged.
The latter was the surprise as economists had been tipping a 2.4% rise. Core prices started rising in October after declining for eight months. Some economists claim inflation may ease later this year as oil and commodities costs slow down and consumer demand fails to pick up.
Economists said that excluding energy as well as food, Japan's inflation fell 0.1% in February. Bloomberg said that by that measure, prices have failed to rise for more than nine years. (That's sort of similar to our measure of core inflation and that of the Fed in the US). That's price deflation. No wonder workers' wages are falling, spending power is falling and consumption is lacklustre.
