Yesterday, financial markets quietly marked the three-year anniversary of the conservatorships declared for Fannie Mae and Freddie Mac. The anniversary is of course far less awful than the ten-year mark this Sunday for 9/11. But, for the global financial system, the GSE conservatorships marked the beginning of a cataclysm that has yet to abate. As we write today, financial and equity markets are eerily reminiscent of September, 2008 while the recession sparked then deepens again. Why are we back where we were?

Sins of omission and commission on the part of policy-makers and industry leaders are of course a large part of the sorry state we’re still in. But, one factor outweighs them all: the asymmetry and uncertainties that continue to mark financial-market reform efforts. After all this time and all the talk, what’s really been done? And, of that, what’s real, meaningful reform?

Any conclusion about too big to fail? Only in the U.S. through Dodd-Frank’s orderly liquidation authority. Global regulators are finally talking about disciplined resolutions, but it’s all talk even as the European Union memorializes taxpayer bailout in desperate hope that it stems the ongoing crisis. Living wills? For big U.S. banks these are afoot starting next week and similar rules are also under way in the U.K. Otherwise, nowhere no how.

Capital rules? U.S. big banks are under Basel III due to the FRB’s de facto Basel III stress-test regime. Swiss banks have Basel III and then some, and U.K. banks may well soon be swimming upstream in a rigorous capital regime. But, elsewhere around the EU and the rest of the world, Basel III is just costly talk, with the price tag of course exacerbated by the slew of surcharge proposals now propped atop it.  Exacerbating uncertainty and asymmetry here is flat-out incoherence. Why have both a global resolution regime designed to end TBTF and surcharges premised on the assumption that this can’t be done? Regulators have apparently opted for talking about regulating everything all the time without even trying to reconcile the different sides of all the power points put on the negotiating table.

Simply put, no financial institution knows how to manage itself in the face of all the regulatory uncertainties confronting it in lethal combination with volatile macroeconomic conditions and panicked financial markets. No wonder prudent bankers are largely in the bunker. Regulators owe it not just to the industry, but more importantly also to the public, to show banks a way out of the bunker. Three years is long enough for regulators to talk; now, they must act to grant financial markets the certainty they crave to promote the recovery we so urgently need.

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