What does it tell you when banks, investment houses, insurance companies and derivatives traders are so pleased with their regulators that they are prepared to pull out all the stops to keep them?
What it tells me is that the current system of financial regulation has been thoroughly captured by the companies it was meant to restrain — and that the only way to put things right is to bring in new rules, a new structure and tough new regulators. Anything short of that, and you can almost guarantee that the inmates will be back in charge of the asylum by the time the next bubble starts to develop.
Judged by that standard, the proposals the Obama administration put forward this week to reform the regulatory apparatus were a bit of a disappointment.
If you have to set up a council of regulators just to harmonize the rules used by different bank regulators, why not bite the bullet and consolidate them into a single agency?
How are safety and soundness of the financial system furthered by allowing regulated banks to run “proprietary trading desks” that are nothing more than in-house hedge funds?
Should oversight of giant markets in financial futures and derivatives continue to be regulated by an agency set up to regulate hog prices and corn futures just because members of the congressional agriculture committees can raise political funds from Wall Street fat cats?
Regulatory Reform That Falls Short – Steven Pearlstein, Washington Post
Also:
Wall Street Fights New Regulations – Editorial, Investor’s Business Daily
Obama’s Regulatory Reform: Our Money In Danger – Peter Morici, NPR
We Need Greater Global Governance – Peter Mandelson, Wall Street Journal
