Writer's Block: Federal Regulatory Overhaul for the Financial Industry
More than anything else, the rules and regulations in place need to be examined and determined how effective they are in maintaining financial system stability and security. Should we regulate away growth? Of course not. Should we not have any regulation on exotic derivatives (as the current system treats them)? Of course not. More than anything else, any new regulatory system needs to be flexible and enforceable, and any new regulatory agencies need to have the power and ability to truly punish those that break the rules. It's obvious that the men and women in Washington who were supposed to be regulating Wall Street fell asleep at the wheel. But that is what 25 years of 'free-market' ideology will do to you. Privatizing gains and socializing losses can no longer be the way of America. Those responsible for financial innovation need to take a good long look at their creations. Do they add value? Or do they simply move money?
Any regulatory body needs to be powerful and strong, but also understand that we can not simply 'uninnovate' the past twenty years. Techniques like securitization and CDS, etc are here to stay. And that is a good thing. But a failure of oversight by Washington, coupled with the disgusting amounts of leverage used by Wall Street investment banks (also cleared by our friends in DC) created a giagantic ticking timebomb. Reduce leverage, keep things small, and allow failing institutions to fail. If that's a regulatory overhaul, then, yes, we do need one.
Any regulatory body needs to be powerful and strong, but also understand that we can not simply 'uninnovate' the past twenty years. Techniques like securitization and CDS, etc are here to stay. And that is a good thing. But a failure of oversight by Washington, coupled with the disgusting amounts of leverage used by Wall Street investment banks (also cleared by our friends in DC) created a giagantic ticking timebomb. Reduce leverage, keep things small, and allow failing institutions to fail. If that's a regulatory overhaul, then, yes, we do need one.