Run, Iggy, Run! from t-squared on Vimeo.
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One way to think of financial regulation is keeping a leash on a dog… in a healthy system the banks and securities firms are active, even aggressive, players… the role of regulators is to restrain the players and keep them from being predators on each other and other parts of the system…
The idea of concentrating oversight into a “systemic” regulator in an economy as large and dynamic as ours is short-sighted… it is going to take awhile to sort through how to balance the inherent dynamism of markets with the ability of regulators to see into and be willing to restrain corrupt practices and over concentration of risk… there are a lot of dogs on a lot of leashes…
From the editorial page of the New York Times today...
~~~~ “Unfortunately, the systemic-risk regulator is more often presented, at least at this early stage of the regulatory reform effort, as an overarching and primary fix for the broken financial system.
It is not.
Congress must not substitute the quick fix for the hard work of regulatory reform.
To do so would squander current public support for re-regulation and would ultimately leave the system vulnerable to a repeat of the same calamities that afflict it today.”~~~~
Animal spirits, properly overseen, are good things … message to Congress… take your time… do this right… it is a complex problem… build transparency at all levels… let market forces help bring stability… reduce regulatory arbitrage… take your time…
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