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Now that most financial institutions that we care about are cross-border institutions, supervising them coherently - that is, making sure that the collapse of the Turkish branch would not lead to a surprising collapse of the Greek branch, or that the Turkish regulators don't beggar their neighbors by reaching for the assets of the holding company as a source of strength before anyone else can - is a tricky international matter. Indeed, it's one of the reasons the Basel Committee was founded, back in 1974, and the committee's first big accomplishment was to set a rule of the road for cross-border supervision (the "home" country supervises the whole thing, the "host" country supervises the individual branch only). And ever since, the committee has been excited about coordinating things further, through "colleges of supervisors" that manage multinationals on an ongoing basis by staying in contact with one another and so on. Such a college was formed during the BCCI collapse, and the jury is out about how it did.

So here's Basel's college of supervisors guidance. As always, it's pretty blah, blah, blah as to verbiage (I'll put it at the end of this post, so you don't fall asleep until then), but the America Firsters who read this blog might want to take note. Standing colleges of supervisors are proto-global administrative agencies, formed by no treaty, and yet run by no country, and the whole point of the guidance is to make the colleges work, in a close-to-permanent, ongoing sort of way. The Basel summary:

Among other things, the eight principles outline expectations that:

acknowledge a college might have multiple or variable sub-structures based on the characteristics of the banking groups under consideration as well as the particular needs of home and host supervisors;
emphasise the importance of leadership and governance by home supervisors in designing and coordinating the operation of colleges so as to support the effective supervision of international banking groups;
provide guidance on the types of information to exchange, subject to legal, confidentiality and market sensitivity considerations, and the range of communication channels available for effective information sharing;
promote specific areas of collaborative work among supervisors, as appropriate, at various levels of a college to facilitate effective consolidated supervision; and
take into account the latest developments and policy-making work in response to the financial crisis. For example, colleges should form one of the building blocks for crisis management planning. They should also facilitate the process of identifying and disseminating information relevant to macroprudential analysis.

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Now that most financial institutions that we care about are cross-border institutions, supervising them coherently - that is, making sure that the collapse of the Turkish branch would not lead to a surprising collapse of the Greek branch, or that the Turkish regulators don't beggar their neighbors by reaching for the assets of the holding company as a source of strength before anyone else can - is a tricky international matter. Indeed, it's one of the reasons the Basel Committee was founded, back in 1974, and the committee's first big accomplishment was to set a rule of the road for cross-border supervision (the "home" country supervises the whole thing, the "host" country supervises the individual branch only). And ever since, the committee has been excited about coordinating things further, through "colleges of supervisors" that manage multinationals on an ongoing basis by staying in contact with one another and so on. Such a college was formed during the BCCI collapse, and the jury is out about how it did.

So here's Basel's college of supervisors guidance. As always, it's pretty blah, blah, blah as to verbiage (I'll put it at the end of this post, so you don't fall asleep until then), but the America Firsters who read this blog might want to take note. Standing colleges of supervisors are proto-global administrative agencies, formed by no treaty, and yet run by no country, and the whole point of the guidance is to make the colleges work, in a close-to-permanent, ongoing sort of way. The Basel summary:

Among other things, the eight principles outline expectations that:

acknowledge a college might have multiple or variable sub-structures based on the characteristics of the banking groups under consideration as well as the particular needs of home and host supervisors;
emphasise the importance of leadership and governance by home supervisors in designing and coordinating the operation of colleges so as to support the effective supervision of international banking groups;
provide guidance on the types of information to exchange, subject to legal, confidentiality and market sensitivity considerations, and the range of communication channels available for effective information sharing;
promote specific areas of collaborative work among supervisors, as appropriate, at various levels of a college to facilitate effective consolidated supervision; and
take into account the latest developments and policy-making work in response to the financial crisis. For example, colleges should form one of the building blocks for crisis management planning. They should also facilitate the process of identifying and disseminating information relevant to macroprudential analysis.

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