Britain and the US are setting up a joint working group to regulate the banking system.

The body is to be made up of officials from the US Treasury and British financial regulatory authorities, according to the Financial Times.

Whitehall officials say the new UK-US working group, whose membership and terms of reference are being finalised, will seek to establish a common approach on how to respond to the crisis before next month’s meetings of the Group of Seven, the International Monetary Fund and the World Bank.
This new cooperative spirit between central planners on both sides of the Atlantic may be generating a lot of press, but is it going help sort out the credit crisis?

“We doubt that the science of central banking as practiced by Bernanke, King and Trichet is really any more reliable than the science of modern portfolio management as practiced by the geniuses at Bear, Lehmann and all the others,” says Bill Bonner in The Daily Reckoning.

“We take as a given that central planners are as prone to error as a bear to honey. It also seems likely to us that it was a mistake for Alan Greenspan to cut rates so aggressively in ’02-’03 and leave them below the inflation rate for so long. The result was an orgy of spending and borrowing in the Anglo-Saxon economies…and an orgy of factory-building and capital formation in Asia.”