CitiGroup CEO Pandit's letter to Obama - Anlaysis of the suggestions

It was recently reported by Bloomberg that CitiGroup CEO Vikram Pandit has written a letter to President Barack Obama, requesting him for "Strong Regulatory Reforms for US based Banks". In his letter, Pandit also cited providing full support of Citi in that effort. He is also reported to mention in his letter that "Banks should not speculate on Capital", and also put up a need that "Derivatives should be cleared and settled by a centrally", i.e. an independent single body, like a clearing and settlement house should be involved in the business of derivatives and clearing settlement.

Now, let's look do some analysis and look at the thoughts put in by the Citi CEO:

First and foremost thing that I can clearly see here is that Mr. Pandit is passing the buck to the government - the government should come up with some strong regulation for banking system in US, the government should setup some clearing house for derivatives business and so on. The second point is also a bit generalised - Banks should not speculate on Capital - cant understand what is implied by that, whose responsibility is it that speculation on banks capital does not happen. Is it the bank and its leadership, is is by the regulators, or who else?

Let's go one by one.

Point No. 1 : Strong Regulatory Refors for US Banks
The fact is that regulations exist - they exist since a long time. It is a fact that the recent turmoil which happened, occured because of the speculative betting business by the individuals. These were the punters employed by major investment banks and firms, who wanted to trade on anything and everything. Putting everything on the government by asking to come up with "strong regulations" is no way to improve the situation. The organizations and its top leadership should themselves take up that responsibility.
If I decide to hire punters to manage my money, it is my choice. the situation is worse with the investment banks, because they hire punters to manage other people's money. No way can the government, or any amount or magnitude of regulatory reforms can prevent the betting business which goes on in the name of securitization.

Point No. 2 - Banks should not speculate on Capital:
Very fair point - but isn't it obvious and isn't it implicit and isn't it known and expected from all the banks?
Still, if that is not being done, then there is something wrong with the whole system. Proabably, Mr. Pandit can come up with some concrete examples on how he expects this to be achieved. What are the steps, he or his leadership circle at Citi, are planning to take to ensure that such specualtions do not happen

Point No. 3 - Derivatives to be cleared & settled centrally:
This is a real good point to consider. But wont this affect the trading business all across the globe? What will happen to Proprietary trading and securitization process? How will the risk management be achieved, in case OTC derivatives are being cleared and settled centrally.
What about the timelag for introdcuing new kinds of derivatives and getting the regulatory approval for them?

Even if you have a central house for clearing of derivatives, trading of the products which traditionally happens over the counter will be hit severly. As a matter of fact, it is much easier for people to trade on mathematical equations if both parties agree. Imagine the lengthy process to get the regulatory approval for the same.

Overall, in my opinion none of the points mentioned above make much of a concrete and implementable justification.