Heard in Davos 2009: Dispatches from the Conference

Could the SEC also Follow the UK's Lead?


The UK set the trend for bank rescues when Prime Minister Gordon Brown took capital stakes in troubled institutions.

The Treasury Department followed, abandoning its initial plan for TARP to buy toxic assets and also moved capital into banks in return for shares. (Whether it returns to toxic purchases or a "bad bank" remains to be seen.)

And now it looks like the Financial Services Authority, the UK version of the SEC, could pave the way for new regulations.

The FSA is looking at a three-pronged approach for regulation, FSA Chairman Lord Adair Turner told CNBC on Davos.

1. A different approach to capital, including a "countercyclical" approach so that capital is built up in the good years. That includes more capital on the trading books.

2. New regulations on liquidity.

3. Ensuring other institutions that act like banks -- or shadow banks -- don't escape the same regulation.

"If it looks like a bank and quacks like a bank, we've got to capitalize it as a bank," Lord Turner said.

One of the toughest questions is how to work out the countercyclical approach to capital, he said. Do you use a formula or leave it more to discretion where regulators say: "we're in a boom time, your capital should be higher than the minimum at this time."

John Studzinski, senior managing director at Blackstone, said the new wave of global regulation will be led by the FSA.

"The FSA is all about taking into account the fact that no two situations are the same," Sudzinski told CNBC.

Companies can "go to the FDA and have a thoughtful, off-the-record, private discussion," he said.