Regulators (and public) are missing the point

Global Solution?
UK Prime Minister Gordon Brown talked a lot about global problem and global solution, but have they solved it now?

Today, G20 Leaders announced a deal, which is very impressive by the standards of their previous meetings. They have pledged an extra $750bn to IMF, $250bn to boost the world trade, and $100bn for the poorest nations. They also put forward to introduce a new and stricter financial regulations at both internaional and domestic levels.

Of course, the world leaders didn't fail to talk about bankers' pay and bonuses and tax havens, as they have been a hot topic, especially in US and UK. But I think the regulators are missing the point, largely because of an immense pressure from public. Tax havens and bankers' pay and bonuses are not the source of the global meltdown, and even if it were it is insignificant. Yes, it is disgusting to take millions of dollars home, while taxpayers have to bail-out your bank. But, it is small, let me give you an example: AIG, the once-mighty-giant-insurer of the world, now the biggest loser in history (breaking the record loss of $98.7bn made by AOL Time Warner in 2002). Its loss for the last quarter of 2008 amounted to more than $60bn and it paid out bonuses of worth $218 million since accepting the government bail-out in September 2008. I don't think it is right for the top executives to take bonuses when they are responsible for the group as a whole, but individuals deserve to be paid bonuses for the long extra hours they work for, especially if their divisions are turning a good profit.
Even if all the bonuses were to be returned, the group's loss remains at more than $60bn, and possibly those profitable divisions will no longer be profitable as the individuals may leave the group.
From what I see on the report, there is $12bn interest expense, to me that's a concern and not $218mn paid bonuses. Why should we spending all our times on a single lost dollar out of almost lost $300? The same goes with tax havens, the "missing" money is not as huge as many believes, probably smaller than "forgotten" taxes as the US Treasury Secratary himself had forgotten to pay more than $40'000 in taxes (but before taking the job).

Then, there are bigger problems with the deal: now they want early warnings from IMF about macro-economic and financial risks as they have not been told about the risks of possible breakdown in the banking and financial sector. Also authorites want to be able to identify macro-prudential risks, to me that is a big big question mark, HOW? I am guessing they will set up a group of so-called professionals or experts to calculate those risks, which will lead certainly fail without a doubt, provided those professionals will be using their-good-old models, which have worked in good times, but failed every now and then. But I applause for the extension of regulatory sight on rating agencies (as well as hedge funds).