In case readers haven’t figured it out, I am a big Willem Buiter fan. Even when he is wrong, he is at least forthright and colorful. He does have an appetite for showing off his formidable intellect. Nevertheless, his best qualities are his willingness to take on orthodoxies and authorities, and his vivid, trenchant style. It was Buiter who at the last Jackson Hole conference accused the Fed of “cognitive regulatory capture,” eliciting a firestorm of criticism.
Today Buiter takes up one of my favorite causes: the need to leash and collar bankers. He dismisses the canard so often trotted out in the US, that too many restraints might inhibit financial innovation. Paul Volcker deemed the most important financial innovation in the last 30 years to be the ATM machine. Nassim Nicolas Taleb has dismissed the supposed advantages conferred by the development of the Black-Scholes option pricing model.
Given the considerable costs gambling innovation hath wrought, the calls to shackle bankers seem completely warranted. If any other class had done this much damage, they’d almost certainly be in jail.
Note the timing of this post. This is pre the G-20, where the Euro crowd is pushing for more financial regulation, particularly with new international mechanisms, while the US is arguing for more coordinated fiscal stimulus. The US does not want to (and won’t as long as the dollar holds as reserve currency) cede control over its institutions. But a good deal more “harmonisation” and coordination is in order.
Buiter provides a long list of reform ideas. I’ve extracted the ones I found most interesting, and I encourage readers to look at the full roster. Be sure to read his comments on self regulation.
From VoxEU:
Financial regulation is a now-or-never proposition as the sector’s lobbying power is greatly diminished. This column argues that we should embrace robust regulation now, risking over-regulation. Correcting mistakes later would be better than risking another era of “self-” or “soft-touch” regulation.
Over-regulate now
It is necessary, for political economy reasons, to rush new comprehensive regulation of the financial sector. While it would be better, holding constant the likelihood of the measures being adopted and implemented, not to act in haste, there is now a unique window of opportunity – a period of extraordinary politics, in the words of Balcerowicz – to actually get the thorough regulatory reform we need. The reason is that the private financial sector is on its uppers – down and out – and will not be able to put together much of a fight, let alone its usual boom-time massive lobbying effort to veto radical measures. It is better to over-regulate now and subsequently correct the mistakes than to risk another era of self-regulation and soft-touch under-regulation of financial markets, instruments and institutions.
Macro-prudential regulation
The objective of macro-prudential regulation is systemic financial stability. This has a number of dimensions:
Preventing or mitigating asset market and credit booms, bubbles and busts
Preventing or mitigating market illiquidity in systemically important markets
Preventing or mitigating funding illiquidity for systemically important financial institutions
Preventing or managing insolvencies of systemically important financial institutionsOther micro-prudential considerations (abuse of monopoly power; consumer protection; micro-manifestations of asymmetric information) should be left to the micro-prudential regulator(s).
Comprehensive regulation
Regulation will have to be comprehensive across instruments, institutions, markets and countries. Specifically, we must:
Regulate all systemically important highly leveraged financial enterprises, whatever they call themselves: commercial bank, investment bank, universal bank, hedge fund, SIV, CDO, private equity fund or bicycle repair shop.
Regulate all markets for systemically important financial instruments.
Regulate all systemically important financial infrastructure or plumbing: payment, clearing, settlement systems, mechanisms and platforms, and the associated provision of custodial services.
Do it all on a cross-border basis.Self-regulation
Self-regulation is to regulation as self-importance is to importance. The notion that markets, including financial markets could be self-regulating, by properly incentivising CEOs and Boards of Directors and through market-discipline, is prima facie suspect. We decide to regulate markets because of market failure. Then we let the market regulate the market. This is an invisible hand too far. The concept of self-regulation is especially ludicrous for financial markets. Finance is trade in promises expressed in units of abstract purchasing power (money). It scales up and down ferociously quickly. If Airbus or Boeing wishes to double the size of its operations, it takes 4 or 5 years to put in place another set of assembly lines. If a bank wishes to scale its balance sheet and operations ten-fold, all it has to do is to add a zero in the right places. Given enough optimism, trust, confidence and self-confidence, financial activity can, through leverage, be scaled up alarmingly quickly. Once optimism, trust, confidence and self-confidence disappear and are replaced by pessimism, mistrust, lack of confidence and fear/panic, the scaling down of bank activities can occur even faster. Such an industry cannot be left to its own devices.
The importance of public information
Regulation can only take place on the basis of independently verifiable (public) information. Regulators cannot rely on information that is private to the regulated entity. This means that the capital adequacy of the first pillar of Basel II has to be overhauled radically, as its risk-weighting of assets relies in part on internal bank models that are private to the banks…
Regulation financial innovation
Financial innovation in products and institutions is potentially beneficial and potentially harmful. There is a need to regulate financial innovation. I propose the model used in the US by the Food and Drug Administration for pharmaceutical and medical products.
First, there is a positive list of financial instruments and institutions. Anything that is not explicitly allowed is forbidden.
To get a new instrument or new institution approved, there will have to be testing, scrutiny by regulators, supervisors, academic specialists and other interested parties, and pilot projects. It is possible that, once a new instrument or institution has been approved, it is only available ‘with a prescription’. For instance, only professional counterparties rather than the general public could be permitted…..Clearly, this approach to financial innovation would slow down financial innovation. It may even kill off certain innovations that would have been socially useful. So be it. The dangers of unbridled financial innovation are too manifest.
Yves here. The FDA has recently come under a lot of criticism (deservedly) but that is due in large measure to a lack of commitment to its mandate from deregulation-minded Administrations, budget cuts, and its conflicted position (40%+ of its budget comes from fees paid by the industry for new drug applications, an arrangement created during the Bush Senior presidency. Too high a turndown rate would deter applications. The problems with the FDA are due to a significant degree to nearly 20 years of efforts to undermine its role. And that is not my just my view; I’ve heard this sort of thing from FDA lawyers and former FDA commissioners). Back to Buiter:
Narrow banking vs. investment banking
The distinction between public utility banking/narrow banking vs. investment banking; (the rest) has to be re-introduced. I advocate a form of Glass-Steagall on steroids, with a heavily regulated and closely supervised narrow banking sector, engaged in commercial banking (taking deposits and making loans) and benefiting from lender of last resort and market maker of last resort support. The investment bank sector will also be regulated and supervised, but more lightly, and according to the same principles as other systemically important highly leveraged non-narrow bank institutions.
Universal banking has few if any efficiency advantages and many disadvantages. Economies of scale and scope in banking are soon exhausted. They tend to be fat to fail, have a lack of focus, and suffer from span-of-control negative synergies etc. Universal banks or financial supermarkets use their size to exploit market power and try to shelter their risky, non-narrow banking activities under the LLR and MMLR umbrella of the narrow bank that’s hiding somewhere inside the universal bank….
Mixed public-private ownership
Given the manifest failure of the efficient market hypothesis, it is not at all obvious that systemically important financial institutions should be allowed to be listed companies. Financial institutions’ stock market valuations have been notorious will-o’-the wisps and have, through stock options and other stock-market valuation-related executive remuneration components, contributed to the excessive risk taking during the recent boom. Partnerships, mutual ownership, cooperative ownership, and various forms of public and mixed public-private ownership may be more appropriate for financial institutions. Perhaps we should even consider removing limited liability for investment banks!
28 comments
Comments are closed.
Rodrik agrees with him on the need to have the de-globablization of finance (if that is putting it correctly), and has written on the subject off & on over the past month.
http://rodrik.typepad.com/dani_rodriks_weblog/
As you compensate so goes the behavior. Wall Street will always out engineer the regulators particularly if their compensation demands it. So there are two absolutes
1. The senior executives of a “narrow bank” must be ineligible for any kind of incentive compensation. Let them earn their fat salaries at which point they will be more interested in preserving the institution i.e. their interests and those of the tax payer/regulator are in alignment.
2. Their corporate governance should be changed so that their boards are first and foremost responsible for depositors not shareholders. Thought should be given to having representatives of the FDIC/Federal Reserve be ex officio board members.
Buiter’s list is not too far off from what is being prepared in Brusssels and in EU capitals ahead of G20.
I have never seen such momentum for new regulation in Brussels since the Internal Market programme in 1992. More EU control would however mean more power to the EU . Thus, the UK will scream as it “looses” power to the EU. However, the UK’s banks and finances are in such bad shape that the usual back-benching will be barely noticeable.
Hence also why Gordon Brown insisted that the G20 should be in London and why he has spent the past 3-4 months preparing. He needs to control the agenda as much as he can.
EU leaders began planning for new regulation in parallel with other measures, e.g. fiscal stimulus last year. My guess is that they realised that many/most banks would not be able to survive on their own and that taxpayers would require scalps (i.e. strict regulation)in order to accept that their money was used to compensate for the failures of the bankers. An approach like Paulson’s/Geithner’s would in my view have resulted in mass protests.
State capitalism is quite normal in countries like Germany, France and Italy. It is the UK that is loosing its free market soul.
If the U.S. opposes the EU’s moves towards stricter regulation, the EU should move ahead anyway. The U.S. seems stuck in every regard except throwing trillions of good money after bad.
Obama/Geithner just appointed Kim Wallace, former Chief Political Strategist at Lehman Brothers to Assistant Secretary of the Treasury, Legislative Affairs.
I am guessing that this is a strong indication that they are going to take a very different position to Buiter, and will allow Wall Street to write the legislation regulating Wall Street.
On one hand, it’s quite a shopping list, and I don’t think that Mr. Buiter himself expects that there is any chance of this being carried out in its entirety. On the other hand: now that the banking system has shown itself to be incapable of responsible behaviour, and seeing what damage they can inflict on completely innocent bystanders… I am looking forward to seeing heavily armed police teams invading bank’s boardrooms!
At this rate, Obama is looking more and more like a one-term president every single day. I never thought this would be the case, even a month ago, but everything I read points to a looming collapse of the entire US economy for which only the new president can be held to account.
As a complete economic illiterate, he seems to suffer from complete cognitive capture by the neo-classical yes-men economist set such as Geithner and Bernanke. Even Krugman doesn’t seem to be cutting through at all for him any more.
I can’t tell you where this ends, but I can tell you that it ain’t pretty.
Prof. Buiter’s arguments are straightforward, but I am afraid too simple to be accepted by a majority. It’s a problem of intellectual honesty that a lot of people have. His call for over-regulations of banks stems from facts-finding and consideration of “obvious” needs of the financial markets, after the mess. It’s a fair recognition of market and human behaviors failures.
It’s a way to create institutions whose incentives are “aligned” with the public interest (in this respects should also be seen the mixed private-public ownership which I also proposed for the creation of good banks. I am sure that Prof. Buiter, like me, refers to a triple A bank in the Netherlands as a model, which by the way happened to be on the AIG’s list of “beneficiaries”). That’s the real problem! If we run a simple cost-benefit analysis (Regulatory Impact Assessment) of the proposed regulation, it’s likely that the benefits to the society and financial markets of the proposed regulation, even over-regulation, are far higher, and increasing over time, than the costs of the status quo or any baseline scenario. Unfortunately people always focus on trying to do things right instead of doing the right thing. Again it’s a problem of knowledge management and sometimes intellectual honesty.
I would add another item to Buiter’s “shopping list” which should be implicit in his consideration of failures of markets and negative externalities: taxation. Time is ripe for the Tobin Tax on speculative and derivatives financial transactions (currencies, CDS, CDO, etc.). could also be considered a Pigouvian tax levied to correct, not only via regulation, the negative externalities of financial markets and address also the “polluter pays” principle in those markets (in fact there are now “toxic” assets). Moreover it’s a fact that financial institutions have not allocated money efficiently with due regard of risk/return ratios. Misallocation or inefficient allocation of resources should be corrected not only with regulation but also with taxation.
I thought ‘prima facie suspect’ to be lacking color – I prefer complete bs.
I’ve supported re-instating Glass-Steagall ever since it was repealed in 1999.
I also like the concept of “Glass-Steagall on steroids”, and would suggest it be structured so an organization has to pick one, and ONLY ONE, of the following institutions that they would like to be:
-Commercial Bank
-Insurance Company
-Investment Bank
-Broker-Dealer
-Retail Brokerage
-Investment Company
No more financial supermarkets, no more insurance companies running secret hedge funds in their basement.
To this I would add that the entire shadow banking system has to come out of the shadows. Money market mutual funds, if they are to continue to exist and receive FDIC insurance have to be regulated as commercial banks.
Impose a Tobin-esque tax on ALL financial transactions with the rate varying by instrument according to a “systemic risk potential” factor. Make future bailouts, should they be needed, self-funding.
Too big to fail has to become too big to exist.
Capital adequacy requirements have to become far more stringent (and no bypassing them by using CDS to transform the liabilities) and have to be applied to all financial institutions, not just banks.
Bonuses need to be calculated over a standard length cycle, not annually.
The industry is not going to like any of this. Too bad. I don’t like seeing $9 trillion of taxpayer money being used to rescue them.
I’d like to add one thing to the shopping list, while we’re at it:
– limit the size of the non-deposit/loan-held-to-maturity part of the balance sheet, and limit how it can grow (say with inflation, or make it 3% for no better reason that we can’t come up with a better number anyways).
Even if the larger institutions are more efficient, we pay for it by more risk concentration.
“Universal banking has few if any efficiency advantages and many disadvantages.”
The big advantage is that it allows a small number of people to engage in enormous gambling bets using other people’s money – or invented money – and either win immense personal fortunes of, if they lose, to extort immense personal fortunes from government under threat. Advantage for them… not for the rest of us.
I don’t share your enthusiasm for Buiter. If he was a formidable intellect he would realize the folly of demanding new regulations of the same foxes that piss on the now scam ‘rule of law’ every minute of every day. Further, if he was really willing to take on the ”orthodoxies and authorities” he would take on system shill over paid academia and the phony good cop bad cop role that it plays in public discourse. Buiter only adds ever more deflective complexity that serves to mask the reality …
This is not a financial problem that will be solved by new regulations. It is a political problem, systemic in nature. We need a government reset. And yes, we are entering “a period of extraordinary politics”, but it goes well beyond the financial sector. The citizens of the tent cities now blossoming in scamerica, comprised of the cast off victims of the present systems excessive elite greed, are already looking for leadership. The time is ripe to begin building a new dream that levels the horrendously corrupt playing field. See the big picture now and you can be a part of it. Failure to see it will cause you to be swept away.
What Buiter and his gullible followers must realize is that this is not just another typical business cycle. It is a manifestation of the Full Spectrum Dominance plan which is now focused on domestic populations. Buiter and the entire middle class (the current plantation overseer class who in the past have been motivated by desire and opportunity) are prime targets that will be replaced by the new overseer class – the far less costly to operate law enforcement class – that dovetails so nicely with the newer societal motivations that have been induced in society in the last forty years — fear and anxiety.
You have choices … You can organize and get out on the streets in protest now while you still have resources or you can wait a year or two and you may not even be able to afford a tent. It is the nature of deception that the marks always believe that ‘one of their own’ would never deceive them and that even when they are confronted with clear proof that they have been scammed they continue to engage in avoidance behaviors right to the bitter end.
Deception is the strongest political force on the planet.
i on the ball patriot
With regard to residential mortgages, we need to go back to 15 and 30 year FRMs and require a 28/36 front/back ratio, <80% LTV ratio, mandatory 20% down payments, minimum 620 FICO, full income documentation, etc. It's not foolproof and it will mean fewer people able to buy homes, but historically it has been shown to be key to averting crises.
If any other class had done this much damage, they’d almost certainly be in jail.
Ummmm, members of Congress? The political class in general?
“Anything that is not explicitly allowed is forbidden.”
Exactly.
I’d just push this one a bit further: the regulators should allow only products which, at the end of the day,
1/ they can analyze and understand
and
2/ for which they have independant ability to determine the parameters necessary to price the products implicit in market pricing.
I’d like to see anyone that is anywhere close to a systemically important position in the financial industry require something along the lines of a M.D., Professional Engineer, C.A., with strict ethics and personal responsibility training and personal liability.
Why didn’t we completely deregulate the doctors, laywers and engineers and let “rational self-interest” govern their actions? Because we’d be flying off bridges made of sawdust-laden concrete if we don’t die from the poisons our doctors feed us that help sales of drugs they get a kickback on. These are systemically important professions for the functioning of our society, we can’t let a mythical “invisible hand” control everything as this trivialises the important study of ethics within these professions that have evolved over hundreds or even thousands of years (eg. Hippocratic oath)
This is why lawyers work 80-hour work weeks for relatively little money for years — so that they can make partner. Give people long-term incentives and they’ll operate as such.
peepeedicking, again.
100 percent reserve banking.
That is the ONLY answer.
And get the private bankers out of creating new money.
Why can’t people get their head around the fact that fractional reserve banking is to greed exactly what they taught us in catechism, an occasion of sin.
Avoid the occasion of the greed-plundering, money-creators.
Let the government create the nation’s money debt-free (See M. Friedman – Monetary and Fiscal Framework for Economic Stability)
and let the banks lend that REAL money once it is created on a 100 percent reserve basis.
It’s either that, or we get into that 50-year cycle of regulation-prosperity-deregulation-crisis-regulation etc.
For the grandkids sake, and as Paul Volcker also said, “Let the bankers get back to banking.”
And a pony for everyone.
Excellent Yves.
Much better than what I had been planning so I binned mine and just linked to yours.
Restrictions on loan securitizations? No whole loan sales, originator must retain a part?
“Paul Volcker deemed the most important financial innovation in the last 30 years to be the ATM machine.” Yes, and according to Wikipedia it’s an import anyway.
I’m intrigued by Buiter’s idea of using the FDA as a model for financial regulation. I think it’s a good idea, but there are some caveats that, if not addressed, would make such an agency powerless.
1) As Yves has pointed out, even the FDA is coming under industry pressure. While it has remained admirably independent for most of its lifetime, and even today, is far less captured than most regulatory agencies, it comes under enormous pressure to clear drugs and clear them quickly. Thus the creation of “fast track” and “compassionate use” pathways to skirt the traditional requirements of extensive clinical data and testing. Furthermore, the creation of “supplements” as a new class of drugs not requiring FDA approval was a deliberate and successful attempt to “deregulate” part of the medical market. Unless the new financial regulatory agency is funded completely by the govt it will likely be captured as well.
2) The cost of running the FDA pales in comparison to the cost of doing the clinical trials themselves. The FDA’s FY09 budget was $2.4bil. That’s chump change compared to the cost of accumulating all the data present in the drug applications the FDA reviews. The money for doing clinical trials comes primarily from the pharmaceutical companies, and somewhat from public sources such as the NIH and Universities. The only incentive pharma has to fund these trials is the enormous profits they can gain from getting approval of a patent-protected medicine.
There is no patent or intellectual property defense (that I’m aware of) of financial instruments. In that setting, who will pay for the studies and “clinical trials” that would form the basis for decisions on approving/denying applications? One possible source is the exchanges, e.g. if the Merc wants to offer a new future, they need to fund the studies to gain approval for it. However, I suspect there will need to be changes in securities laws allowing for periods of exclusivity similar to patent protection that would allow the exchanges to profit from their new products. This type of protection is antithetical to the financial markets’ usual view of having multiple exchanges competing to provide the lowest transaction costs.
3) There is a substantial non-industry source of funds to provide the data that the industry is unwilling to provide, namely the NIH. Many of the product recalls or changes in drug indications / warnings, etc. come only after medical researchers apply for NIH funds and carry out studies designed to ferret out long-term complications or look at comparative efficacy between multiple similar drugs. While drug companies are happy to fund studies that could potentially expand the approved uses for their products, they’re loathe to fund studies that show their products as less efficacious than competitors’ or even outright harmful. Furthermore, they lose all interest in any studies once their drug’s patent expires. Is there a funding source equivalent to the NIH (budget ~$30bil) for the financial world?
At any rate, I believe Mr. Buiter’s recommendation is a good one: financial innovation can be good or bad, just like medical innovation. And if we’re willing to accept the possibility of some people dying while a potentially useful medication makes its way through years of trials as a necessary cost to protecting people from the far larger harm of dangerous medications, then surely we should be willing to accept the loss of some profit or inefficient allocation of capital for a few years until some miracle financial product gets approved.
My only observation is that the medical regulatory apparatus depends on more than the FDA alone. The FDA is in many respects the last (and perhaps most visible) step of a complex infrastructure and that without replicating at least parts of that infrastructure, simply creating a financial FDA by itself won’t produce the results for which Mr. Buiter hopes.
Lune, excellent points, thanks for your analysis.
My primary concern regarding regulation is that it inherently favors larger companies who have more resources to navigate regulatory complexity than small companies do. This is particularly critical in financial services, which has increasingly become dominated by incredibly massive corporations.
If the general consensus is that finance needs fewer “systemically important” super-corporations, then regulations need to be designed to keep larger and smaller companies at the same level; or, if anything, provide counter-incentives (like larger reserve requirements) for larger companies.
Without a clear vision, the rush to redesign financial regulations could end up like the rush for “toy safety” from last year; that is, designed by lobbyists to the benefit of the largest corporations at the expense of their smaller competitors. We can’t allow that to happen here, as that would not reduce the systemic risk this regulatory overhaul would presumably be designed to remove.
At the very least, we should require that “innovative” bankers take the Hippocratic Oath: to do no harm.
Much simpler.
If yr a deposit takeing bank, then restrict it to simple banking, ie lending out a small multiple of it’s deposits and the cash management thereof.
If yr not then you can act as you like, within the law…..but you’ll have to raise your own capital and you will never be bailed out by the taxpayer and subject to rigorous oversight. Plus all earnings as bonuses, are locked up until official retirement age.
What has to stop is useing retail deposits as a down payment on punting and then when it goes wrong, you can hold a gun to the governments head and force them from electoral fear to bail you out.
There also has to be retribution against the theives….so prosecute them for fraud, on the basis that all those Derivatives were sold fraudulently. As there was never any chance, if they were called, of being able to pay up and the real reason they were traded in such size, was to generate bonuses.
The problem we have though is that all the people who either caused this to happen or allowed it occur are still in charge and have a massive vested interest in hideing it. Even worse some think they have found the ultimate sucker to bleed dry…..the taxpayer.
Until we see honesty in describeing what happened, which in short was that greed ran rampant and corrupted utterly all the parties, until all became nothing but liars and crooks, there is no chance of any solution.
Peripheral Visionary-
That's indeed a concern with any regulation, that it becomes used as more of a barrier to entry into the market than a true protection of the public interest.
Certainly in the medical field, the vast majority of new drug applications are fielded by a few big pharma companies. Yet underneath that lies a different reality: there are a huge number of small start-up biotech companies, not to mention researchers in academic settings, who create potential drugs. What typically happens is that when these drugs reach a promising stage of development, the small firm either partners with or gets bought out by one of the big firms which then undertakes the complicated process of getting FDA approval. Once the FDA approves the drug, the large company typically markets and supports the drug, with license and patent royalties going back to the original innovator.
Conversely, on the back end, once a product becomes generic, plenty of small production companies, both here and abroad, begin to produce and market the drug.
While Big Pharma tries to convince Congress that without them all medical innovation would stop and people will be dying in the streets, the reality is that much of the innovation in medicine comes from academia and biotech startups (startups being a loosely used term when we're talking about companies that can burn through hundreds of millions of dollars in research dollars :-), while much of the production comes from generic manufacturers (indeed, pharma companies frequently outsource the actual production of their patent-protected medications to generics companies, since those companies focus so squarely in improving manufacturing efficiency). Big Pharma (while undoubtedly doing some R&D as well), has increasingly become a conduit to acquire promising companies / patents / drugs, then sheparding them through the regulatory process and managing the marketing and support through the patent lifecycle. Much of the heavy lifting of R&D and manufacturing is done outside the big pharma companies themselves.
In many respects, this is a similar arrangement that hedge funds have with their brokers. A starter of a hedge fund typically has some idea for an investment strategy that he wishes to implement. But rather than assembling an entire team of traders, lawyers, securities specialists, etc., he / she contracts with a prime broker who is responsible for executing the trades, managing the bookkeeping, providing custodial services, and complying with securities regulations.
Also, I'm not entirely convinced that the "systemically important" corporations in the financial world are truly all that important. Rather, I suspect that's the label Washington conveniently assigns to such favored companies so as to have an excuse to shovel hundreds of billions of dollars of public money into private hands. Already, the world of the big Wall St. investment banks have been reduced from 5 to 2 without the world coming to an end. And the 2 largest commercial banks in our country (to say nothing of the far larger ones in Europe) are close to bankruptcy.
At the end of the day, I suspect far more damage will have been done through our govt's efforts to prop up those Too Big To Fail firms, than from the (eventual and inevitable) actual failure of those firms.
I suspect the term "important to the financial system" in Washington is really code for "important to my re-election". And the solution for that is political reform (i.e. lobbying and campaign finance), not necessarily regulatory reform.
We also had a “period of extraordinary politics” after 9/11. All sorts of new laws and regulations were hastily passed, such as the Patriot Act. In hindsight, a pause for sober reflection would have been a good idea.
If haste was a bad idea for security regulations, maybe it’s also a bad idea for securities regulations.
Personally, I don’t think he goes far enough. I think we need to start putting some criminal sanctions on some of these financial shenanigans, jail time if the amounts lost are over some threshhold amount and if the actions were reckless. We jail pickpockets and robbers, why do we not jail those that destroy the livelihood of hundreds or thousands in one fell swoop?