It's a bit like closing the barn door after the horse has bolted. That's how BusinessWeek has described Treasury Secretary Henry Paulson's policy recommendations to solve the credit crisis following the work of the President's Working Group (PWG).

Basically, Paulson says the the senior management of financial companies were responsible for managing their risks and establishing the correct incentives for decision-makers. According to Paulson, there's not much of a role for Government. To read him word for word, go to The Wall Street Journal. Alternatively, you can read the PWG position here.

So where does that leave the market? Not much better because there is a failure here to attack the causes.

Increased scrutiny is all well and good, but will that make the banks more prepared to lend? Not if they can't cover their costs.

He also avoids tackling the fundamental conflict of issue confronting ratings agencies. The only way to resolve the problem is for investors to pay for the research, not the issuers who have a vested interest in getting a certain rating.