Time for Wall Street Regulation

The calls by mostly US Democrats for greater regulation for Wall Street will be supported by most UK small businesses. Although most UK companies, sole traders and partnerships will not have direct investment in the United States financial markets, the effect of the financial crash is felt globally.

Make no mistake; the events on Wall Street will affect companies and people starting a business all over the UK. Customers will feel less confident about their finances and the economic situation and will restrict buying to the necessities.

This in turn will lead to businesses purchasing fewer items from other commercial entities and the knock-on effect continues towards an increasingly downwards spiral fuelled by recession and employment worries in an ever shrinking buying circle.

Because generally fewer people will consider starting a business in a recession, the future business taxes which the Government relies on for the sustainment of public finances will diminish. Both new and existing businesses will sell less and therefore the VAT, corporation and income tax generated will be less.

The stark reality of the power that Wall Street, the fund managers and banks posses has been burned in to the conscience minds of Governments, regulators and the public who are crying out for answers.

Against a background of democracy, the realisation that none of the people who control and influence the economic and financial well-being of everyone on the planet has been elected must move the world to a more socialist leaning.

The arguments for capitalism, free markets and small Government have taken a battering in the same way that Communism did after Russia ran out of money in the 80’s.

The kind of regulatory structures which are likely to be invoked following the global collapse of financial centres are likely to impose stricter controls on bank liquidity ratios, ensuring that their lending is supported by adequate deposits.

As always, some of the regulatory and reporting duties will fall on Accountants by way of new standards and disclosures which assess the exposure of a particular business to potential drastic falls in the stock market share prices.

Whatever the specifics of the proposals to regulate Wall Street, one thing is certain; if a Democratic President is elected on November 4th 2008, the changes will be sweeping and almost designed to be a form of punishment to the class of perpetrators on the current crisis.

The spate of new laws and regulatory provisions which will be brought in are likely to be culture changing in their nature, designed to create a solid economic basis on which all stakeholders can build and make future plans.

The effects could affect the ability of everyone to register a company in certain financial industries which might well in turn dampen the global entrepreneurial spirit to an extent. But as we have, and indeed are still witnessing to results of rampant disregard for people lives when Wall Street is left to be completely free, the needs of the many must now outweigh the greed of the few.