> But one reading of the Basel Accord was that it was an attempt to use
> capital requirements as a substitute for supervision. That is, with enough
> of a capital cushion, the banks could be trusted to do anything. Ha ha.
A driver of the move to capital requirements, though, was that reserve requirements were just no longer very effective for monetary policy, given how the financial system had evolved since the 1950s. Namely, interbank and bank-nonbank markets had evolved, first for bank assets - mainly government debt - and later on the liability side - CODs etc, so that reserves could be easily replenished as needed in flexible ways that were not very predictable to the monetary authorities. Capital requirements were seen as a means of restraint that was not quite so flexible - or so the central bankers hoped, although again we have seen the further evolution of structures and practices which thwart the regulatory intentions. Basel was not only deregulatory, but re-regulatory.
There's an IMF paper here that outlines this monetary policy aspect (as opposed to the prudential aspect) of Basel and capital requirements in general, with a lit review - but it unsurprisingly leaves out the post-Keynesian structuralist literature I find useful for getting my head around it. http://www.imf.org/external/pubs/ft/wp/2001/wp01151.pdf
On your broader point, I can see why you would be frustrated with a simplistic 'there is never any deregulation' position. But I would want to defend a more nuanced marxian critique of the regulated/deregulated dichotomy - the main points being that it is not only the legal structure that sets 'the rules of the game', and that the regulating mechanisms of the economic system evolve relatively independently of policy intentions.
So, for example, higher unemployment now acts as a discipline on wages, which used to be provided by a more centralised wage bargaining system. It may be less regulated but is equally disciplined. E.g., in Australia in the 1950s and 1960s employers were frightened of decentralised bargaining because well-positioned workers tended to get higher wages than entitled to by the Awards. This problem became known in the academic literature as 'wages drift', and employers vocally favoured a centralised system that kept them from having to compete on the basis of wage costs. Nowadays the attitude is the opposite and this is entirely due to the fact that they don't have to worry about wage pressures thanks to unemployment. The state is still involved here, with macropolicy strategy choking off growth once unsustainable wage pressures emerge, but direct regulation has been replaced by a more indirect power.
(Sorry to use an Austr. example again, but it's what I know. I realise that in the US the labour market break is not as sharp - you always had higher unemployment and less centralised wage regulation.)
Cheers, Mike scandalum.wordpress.com