Global Banks need Global Regulation

The collapse of Lehman Brothers which had nearly 900 subsidiaries in around 20 jurisdictions demonstrates that financial institutions that want to be active on a global basis also need to be regulated on a global basis. The alternative has to be that each subsidiary is regulated on a watertight national basis (with its own capital requirements). Politicians and Regulators have to give a clear-cut response to the question what would happen if a globally-active bank with large operations in several countries gets into serious difficulties. As banks spread their wings wider and wider - see Banco Santander and Unicredit for example - an answer to this question becomes more and more urgent. Can their clients rely on the backing of their home country or is the government of the host country expected to write a blank cheque if the worst should happen? The case of the Icelandic banks should have been a wake-up call.