Britain and America are heading for an embarrassing showdown at next month's G20 financial summit in London as Mary Schapiro, the recently appointed head of the Securities and Exchange Commission, has signalled she will abandon efforts to seek a convergence of financial regulation between the US and Europe.
The move,
which is said to have taken UK Treasury and European Commission officials by surprise, could prove an unwelcome distraction at the meeting, convened especially to hammer out global solutions to the financial crises crippling economies worldwide.
Schapiro, who was appointed in January to succeed Christopher Cox as head of America's chief financial regulator, is said to believe that fixing domestic financial regulation problems are a priority compared with seeking convergence.
The shift was outlined at a conference of European bankers in Washington DC last Monday and Tuesday by Erik Sirri, the director of the SEC's trading and markets divisions.
In recent years a great deal of progress has been made on convergence of financial regulation between the EU and America, in particular the convergence of accounting standards and the mutual recognition of securities regulations.
Since April 2007, a body known as the Transatlantic Economic Council had worked on roadmaps that were seen as essential in creating the kind of co-operation convergence requires.
But SEC officials have made clear in private that those roadmaps are to be put up for review, under orders from Schapiro, which effectively means they will be put on the back burner.
"It is very sad," said one European financial regulator who attended the meeting with Sirri in Washington last week. "The roadmaps were the result of many years of work but now the SEC is very cautious about moving forward with anything like this."
A spokesman for the SEC would not comment about the roadmaps but indicated the regulator has much to do in the United States.
"We believe in co-operation," he said, "but also need to take into consideration national processes."
The SEC moves are expected to increase fears of US protectionism, which have in recent weeks dogged President Obama's efforts to successfully launch an economic stimulus package.
The SEC moves contradict the theme of Prime Minister Gordon Brown's recent visit to the US in which he stressed the need for a "global new deal".
Treasury officials declined to comment about the SEC moves.
- OBSERVER
Britain and America are heading for an embarrassing showdown at next month's G20 financial summit in London as Mary Schapiro, the recently appointed head of the Securities and Exchange Commission, has signalled she will abandon efforts to seek a convergence of financial regulation between the US and Europe.
The move,
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