Regulation is always a touchy subject with people. When things go bad, people want more of it. When things are good, the regulation laws never seem to fully protect our society from things like Madoff or the financial crisis or the housing debacle. PLEASE DO NOT THINK I AM AGAINST regulation. I am fully for sensical and appropriate regulation of most sectors. Like many of my columns, I stress a balanced approach to solving issues and with regulation, that approach is 100% required.
I deep down believe that any business or enterprise that wants to get around regulation can and will. The Financial industry did and Dodd Frank will improve things at the margins, but with a global economy and large banking centers outside the US, it is hard for me to believe that Dodd Frank and other laws will prevent another crisis. This topic came up last night (see my morning posting "Musings from the corner bar seat") and I was totally portrayed as I didnt want any regulation. That is far from the truth. I do know that regulation in the financial industry will help, but will never prevent a major meltdown.
A very smart gentleman pointed out something to me last night that and I have had time to think about more today. I do agree with his premise that the Glass Steagal repeal was a huge moment in the financial industry and probably was a caused of alot of the issues around the financial crisis. A lot of people would prefer that banks just keep your money and make loans. That is the way it used to be. Now JP and Citigroup are so large and intertwined with banking, trading and investing that you never know what could go wrong (see 2008). I think that argument has validity to break these enterprises up, but we also have to remember how important (everyone is sighing right now) these companies are to the market and overall.
I think we need to get the best people in government (regulators or legislators etc). That is how you solve problems. Get the best and brightest!
More to come.....