Regulation: The Scourge of the Economy or the Cure?

The Wall Street safety net needs to be completely eliminated. Then watch how quickly they clean up their act when there are NO MORE TAXPAYER FUNDED BAILOUTS.

This should be a 60 minute video. This topic makes for a great debate. Public sentiment is to create more regulation in response to this financial crisis but we really need to take a step back and consider if any existing regulation actually helped fuel it. I just really don't want another lawmaker reaction like Sarbanes-Oxley which solves very little of the initial issue and causes American companies to be at a disadvantage on the global stage.

Dr. Brook's passionate presentation is inspiring and I agree with him; if you look at history, regulation is what caused this mess. Mr. Callahan was hard to follow and didn't convince me of anything.

Well let's see...with deregulation we got the meltdown in 2008 and a collapse of the entire housing market due to mortgage backed derivatives and over leveraging by banks and mortgage writers, not to mention hedge funds. Oh yeah, and the Great Depression was also caused by speculation and over leveraging which is why they implemented the Glass Steagall Act. Which our stupid Congress repealed in the 1990's. We came out of the Great Depression by going into World War Two. So...how much worse could regulation be than deregulation?

TechDave has a point, Ismellatoad. Unfortunately, I agree that the deregulation by getting rid of the Glass Steagall Act was part of the process that caused this current problem. So I am not altogether in TechDave's corner. Another part was the regulation put in place to replace it. Ostensibly, the aim was good (if our politicians were being honest about their aims, and that could be another whole debate...) but by allowing entities like ACORN to threaten banks' FDIC eligiblity by simply claiming that they were being "discriminatory" by *not* choosing to broker sub-prime loans (the main culprit of the Housing Boom & Bust cycle -- overly easy money at low interest rates making even non-fraudulent loans way too easy to get being another biggie) only meant that even the smart people were told that they had to get in the pool and play with the leeches. Obama worked for ACORN. As a Lawyer. They threatened *many* banks this way, and it would not even have taken a successful lawsuit for them to have gotten their way, had the banks failed to play ball. Community organization at its best.

Of interest is the fact that Both Michelle and Barak Obama have become "voluntarily inactive" and are ineligible to practice Law. Michelle has *some* cover that her husband does not. Her "voluntarily inactive" status could be because she never intended to ever practice Law Again and that it just was not important enough for her to pay (in *good* lawyer's pay) peanuts for the privilege of changing her mind easily on this. His, on the other hand, comes in 2008 in fact, when it became quite clear that if he did *not* voluntarily remove himself from the bar, he would be forcibly disbarred for something he did not want everyone knowing about while trying to become the next president, and fighting Clinton for the chance. To wit: He had LIED on his application to the IL State Bar regarding whether or not he used another name other than Barrack Hussein Obama, he stated, ���NO���. But the world knows that he used and had been known by the name, ���Barry Soetero���. Indeed, that was his legal name as he was adopted by Lolo Soetero when he lived in Jakarta, Indonesia. That may be a technicality for most of us. However, Murder, Rape, Theft, and other more serious crimes escape prosecution for just such "minor" lies.

If there is regulation, there needs to be two things present:

1) Forsight, which can be gained to some extent from hindsight.

2) Integrity, which in Washington, D.C., is just plain lacking.

Given that evaluation, at this time I would generally say that *more* regulation is *not* a good idea because the corruption in Washington makes it very unlikely that the true aim of any regulation is anything more than manipulation that the politicians can profit from. Look at Pelosi's Profits from 2010. Do you think she had *insider information* on the whole market and was worse than Martha Stewart for making a buck or two off that (and on our backs as well, I might add) and should be doing time as well? Of course. Will she? Never hold someone like her accountable. It just can't happen.

Some regulation is useful to protect stupid people, which we have an ample supply. But they're expensive and frequently ineffective, so they're a luxury that we don't seem to be able to afford right now. The tort system, for all it's shortcomings, is more effective at preventing corporate misbehavior than most of the bureaucrats. The recent financial troubles were not helped by the enormous regulation in place previously and wouldn't be prevented by adding regulations. Regulating the last crisis is like fighting the last war - you'll usually lose. And nobody is very good at predicting the next crisis, therefore will not be regulating the right stuff when the next one hits. Holding the bad guys and, to some extent, stupid people responsible for their behavior provides the most stable and comfortable future for all. Except, of course, for the power seekers who enjoy telling others what to do.

Read Senator Schumer and Mayor Bloomberg study called " Sustaining NY's and the US' Global Financial Leadership Services," in which they advocated much less regulation, oversight and liability for the financial services industry. It was released on January 22, 2007 just as the financial crisis was beginning. It took Schumer until November, 2008 to take the study off his senate website. Now it is only referred to in his archives. If you want to read further get a back issue of Harper's from June/May 2006 where Michael Hudson published an article,"The New Road to Serfdom, An Illustrated Guide to the Coming Real Estate Collapse." There were fools who followed and advocated for the greed of WALL STREET and there were a few individuals swimming against the tide of greed who could see a crisis coming.

Would you expect the people that got us into trouble because of deregulation to say anything against deregulation.Greedy people never want any regulation.Its like playing monopoly the man with the most sets his own rules & always comes out on top because he doesn`t go broke from one set back whereas the small man perishes & succumbs to the big dog.The wealthy never want a level playing field it exposes them to competition.

Big problem about wall street regulation is the lack of regulation on over
leveraging.

Very apparently not enough.The problem is that regulators were lackidaisical in their jobs.

There are actually three parts to this:

1) Regulation
2) Policy ��� the forgotten part
3) Enforcement

Regulation---
When the regulation(s) cost more to follow and audit than what they are supposedly protecting - then they are a burden and should be eliminated.

Regulation is a form of governance. Regulation will tell a company what it can not do and what it can do...i.e. what the government wants the company to do or not.

What happens to a company or industry happens to you. So how do you like the point of the knife in your back anyway?

Regulation ��� at some appropriate level ��� is needed.

Regulation is not the solution to a supposed problem. For example, the housing crises occurred within the MOST regulated industry in the United States ��� banking and finance. And it still occurred. If regulation(s) was the answer, then this would never have occurred.

Policy---
The forgotten part of regulation is policy. The two go together and can not be separated.

The government can and will have a major influence (good and bad) on what an industry does or does not do. And this too will affect you.

Enforcement---
If no one person understands it, how do you enforce it? How do you comprehend a 50 lb binder of rules and regulations? You can���t.

Remember, this is also another backdoor from of policy.

When you hear a story about some agency being understaffed, why is that? - Because someone wants it that way. It���s the government���if it determines 100 agents are needed, what is to stop it from hiring them���.nothing���..unless there is a policy at work.

But remember this - When the regulation(s) cost more to follow and audit than what they are supposedly protecting - then they are a burden and should be eliminated.

Support Federalism and the return to a Constitutional Government, and YOU will not have to worry about over regulation.

Ismellatoad, you're read on the causes of the great depression and our current nightmare is wrong. These problems were caused by the booms that preceded them, and the booms that preceded them were caused by the Federal Reserve showering a system with free money which led to widespread misallocation of capital into frenzied markets. These problems were NOT caused by any certain level of regulation or lack thereof. They were caused by unstable money, a situation that's fun until the punch bowl empties.

The problem isnt regulation. Regulation is basically a word which means "the government looking over your shoulder". The government is incapable of regulating anything and doing a good job at it. This point was made in spades over the last 10 years in this country: the SEC faoled to rein in the internet bubble, and then the Fannie and Freddie regulators completely fell flat.
The problem is government intervention: if we had simply let the failed banks fail, we'd be well on our way to balancing our economy. As we have it now, the government intervened, seriously warped the system, and we're on our way to zombie land. The government needs to back off, and by back off I mean, when a company puts a gun to its head and pulls the trigger, it should be permitted to die.

The failure was Fannie and Freddie. Govt lending institutions. Any time govt institutions loan money you will get failure. Canada doesn't have a fanny and freddie. The US govt was demanding that bank,s fannie, and freddie give money out to people who could not pay it back. This was done through regulation (anti red lining, minority lending). Yeah it's a big mystery for sure....

Also failed: car, motorocyle, car parts, retail, small business, brokerages...

Where there was enforced regulation, Canada, their banks, housing et al did not fail. Did not even hickup.

Enough wiith the right wing nuts, already.

Too Big to FAIL is a nice propaganda piece produced by the wholly owned subsidiary of the Fed, Hollywood.

INBREDS!!!!!!!!!!!!!!!!!!

Can they regulate free speech or not? God help us all! Some on the ropes want to ban clothing too! WOW! Back to you! NEXT!

Deregulation is the problem, without question. The financial derivatives market was completely unregulated before the bust, and still is for that matter. As were the regulations for mortgage banks and their mortgages. For example, many of these banks were able to provide large loans to people without any adequate proof of income or the ability to pay their mortgage. This was all a recipe for disaster. If regulation is the problem, as some of these analysts are implying, then any over-regulated country should be suffering the most through this recession. But that's not the case. Canada and Australia, for example, never had a housing bubble or stock market collapse, and never truly entered into a recession. And the countries that are hurting most in Europe right now, are in fact the most unregulated ones. Germany and France are doing well. It's the unregulated periphery countries like Greece, Spain and Portugal that are bringing down the rest of Europe unfortunately. Prior to the stock market collapse of the Great Depression, there were virtually no regulations in place. To avoid another depression, strict federal regulations were put in place regarding banks and trading policies. This led to virtually no stock market/financial bubbles from the 1940's up until around 1980. And then Reagan and a GOP controlled Congress began deregulating virtually everything. Now our economy experiences another new financial shock almost every decade. There was the S&L crisis in the early 90's, the tech bubble crash of 2000/2001 and the housing/stock market crash of 2008. WIth the current regulations in place (or lack thereof) we can fully expect another bubble of some sort to burst before the end of the decade. For anyone that thinks too many regulations are stifling our economy, they only need to look at the history books to be proven otherwise.

Doh, look at Canada for one example- no bailout and no failed banks, I wonder why? OK, I don't wonder why, Glass-Staegal type regulation. Go away Brooks, you are a fool.