Blankfein: Markets need global regulatory coordination

Fixing the global financial crisis will require more effective government regulation and greater cooperation among regulatory agencies around the world, according to Lloyd Blankfein, chief executive of The Goldman Sachs Group Inc. of New York. “At the very least, fixing a system-wide problem … requires effective central regulation and the convening power of regulators,” Mr. Blankfein wrote in an op-ed column in today’s Financial Times. “For policymakers and regulators, it should be clear that self-regulation has its limits,” he wrote. Global supervision of financial markets “should reflect the global inter-connectedness of markets,” Mr. Blankfein added. But he also cautioned that new regulations should not come at the expense of eliminating risk in markets. “Taking risk completely out of the system will be at the cost of economic growth,” Mr. Blankfein wrote. Controversial financial mechanisms such as securitization and derivatives should be regulated, but not abandoned, he wrote. Mr. Blankfein also implied that hedge funds should be regulated. “All pools of capital that depend on the smooth functioning of the financial system and are large enough to be a burden on it in a crisis should be subject to some degree of regulation,” he wrote.