Capital Brief: Regulators Worldwide Said to Need New Tools

WASHINGTON - Regulators worldwide need new tools and techniques to keep up with financial conglomerates that cross traditional lines of banking, insurance, and securities, according to a report to be issued today.

The report, by a group of financial regulators from 12 countries, calls for judging the capital adequacy of both a conglomerate as a whole and of its individual units.

The Tripartite Group of Bank, Securities, and Insurance Regulators, formed in 1993 at the instigation of the Basel Committee on Banking Supervision, also urges "intensive cooperation between supervisors responsible for different entities within a conglomerate" and recommends that regulators be given authority to prohibit complicated corporate structures that make it hard to see what individual parts are up to.

The formation of the tripartite group marked the first time bank, securities, and insurance regulators from different countries had come together to work toward a common approach. The U.S. representatives on the group were from the Federal Reserve Bank of New York, the New York State Office of the Superintendent of Insurance, and the Securities and Exchange Commission.

The group's efforts will now be continued by a "formal joint working party" of the Basel Committee, the International Organization of Securities Commissions, and the International Association of Insurance Supervisors.

"Whether or not we can reach agreement on how we supervise these things is way down the road," said one U.S. bank regulator.