By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

LONDON — Before the crisis, financial regulators were often accused of being in thrall to bankers. Today, they are in greater danger of being captured by academics. British boffins have recently got bogged down debating whether banks should hold significantly higher levels of equity. Even if the idea is right, it is not remotely realistic. Policymakers should concentrate on more modest but practical reforms.

By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

DAVOS, Switzerland — Bankers are back on the front foot. At the World Economic Forum in Davos, Jamie Dimon led a chorus of his peers warning of the dangers of excessive regulation. In front of a packed meeting, the JPMorgan chief told French President Nicolas Sarkozy, “Too much is too much”. But his complaint is misguided — and his new offensive premature.

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

The “too big to fail” problem will be partly fixed in 2011. Global regulators should end up agreeing to make a select group of big global banks hold higher levels of capital. That will make them safer, while removing some of the benefit they get from being big. But eliminating the taxpayer guarantee enjoyed by large lenders will require more fundamental measures. That will take years to achieve.
Regulators everywhere agree that banks deemed too big to fail are dangerous. Because of their importance they enjoy implicit — and sometimes explicit — government support. As a result, large lenders tend to have higher credit ratings and pay less for deposits and wholesale funding. This encourages them to become even larger and more interconnected.
Broadly speaking, there are two ways to tackle this problem. One is to make big banks less likely to fail. The other is to reorganize them so that they can be allowed to fail without threatening the system. In 2011, regulators are likely to concentrate on the first option.

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It’s official: The biggest banks are the weakest. The Basel Committee on Banking Supervision on Thursday published its study of the impact of new global regulations, known as Basel III, on the banking industry. Had the new rules had been in place last year, the 94 largest lenders in the world would have needed 577 billion euros ($762 billion) of extra capital. It’s a reminder of just how far the biggest banks still have to go.

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

LONDON — Ireland’s politics could complicate its bailout with potentially devastating consequences. Even though the ruling coalition has applied for financial aid, political turmoil means it may not survive long enough to negotiate a deal with the European Union and International Monetary Fund. With years of painful austerity on the way, the desire for a political fresh start is understandable. But any delay could further undermine confidence in the country’s fragile banks.

It’s as if the credit crisis never happened. Despite being one of the most vilified professions on the planet, investment bankers are taking charge of some the world’s largest financial institutions. The promotions are not as barmy as they may seem. But if regulators and investors get their way, the new bosses will quickly need to learn some old-fashioned retail banking skills.

The latest name in the frame is Andrea Orcel, one of the leading contenders to take the top spot at UniCredit . If he lands the job, the Merrill Lynch dealmaker be the third investment banker to be appointed CEO of a large European lender in a month,following the promotions of Stuart Gulliver at HSBC and Bob Diamond at Barclays .

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Peter Thal Larsen

Investment banks have reined in their worst pay excesses. But inconsistent enforcement of bonus rules in the United States and Europe means some are still getting away with bad behaviour. If banks and regulators can’t agree common standards, they risk another political backlash.

Michel Barnier wants Europe to be better prepared for the next financial crisis. But the EU’s financial market chief’s plan for bank taxes seems to miss the point. Timothy Geithner’s push for EU-wide stress tests raises questions of its own. But at least the U.S. Treasury Secretary has identified the core problem facing Europe’s financial sector.

The current euro zone crisis has its roots in sovereign debt. But concerns about banks’ exposure to risky sovereign debt have led to strain in the European inter-bank funding markets. There are also signs that U.S. money-market funds, which hold more than $500 billion of euro zone financial assets, are drawing back.

Germany’s short-selling ban misses the point. The country’s plan to stop naked shorting of some financial stocks and European government bonds — as well as related credit default swaps — may score political points. But it sows confusion, and will hardly help tackle the causes of Europe’s financial woes.

The German ban appears to apply to three types of securities: shares of the country’s 10 largest financial institutions, European government bonds, and European sovereign CDS. The first is fairly harmless, the second seemingly pointless, and the third downright confusing.

Embarrassing emails aren’t new to Wall Street. After the dotcom bubble, star tech analysts were condemned for sending messages mocking the same stocks they urged investors to buy. Now Goldman Sachs is in the spotlight after Senate investigators uncovered correspondence from current and former executives which suggest they were anticipating the collapse of the mortgage market even as they flogged related products to clients.

What’s most striking about the messages, however, is who wrote them. Goldman’s senior executives have long preferred voicemail over email for confidential communication. Indeed, some Goldman bankers believe it was this technological difference that helped the bank to dodge the Internet-related scandals that tainted rivals Merrill Lynch and Citigroup: voicemails are harder for investigators to scan.