U.S. Regulators Mull New Push to Shape Bank Pay - WSJ.com

BLAMING THE HORSE INSTEAD OF THE JOCKEY: U.S. Regulators Mull New Push to Shape Bank Pay - WSJ.com

I'm not that familiar with European rules other than that there was an apparent happy marriage between the Basel II requirements (which effectively let banks transfer the assessment of risk to the credit rating agencies) and the American Congress' push to have Fannie and Freddie give loans with looser credit conditions to expand the rate of homeownership.

Republicans tried to rein in Fannie and Freddie, but the Democrats in Congress (like Barnie Frank) refused to curtail this lending.

The rating agencies didn't have any competition and thus were able to act in a lemming fashion with no logical consideration of the fact that housing prices were going up much faster than salaries - while, at the same time, there were few constraints on the supply of new housing. (Obviously the study of supply and demand had been missing in their socially-minded economics courses.)

So, we had an apparent process-oriented reaction in Europe supplied by inane policies coming out of government in Washington (plus of course the Fed's support for low interest rates).

Now that there is Basel III and the new financial regulatory act in the US, I'm missing something in each case addressing the above-noted causative factors for the bubble and crash?

Somehow all this blame on bankers seems misdirected - sort of like blaming a horse for running in a race (the banks being the horse and the government and regulators the jockey).