And now for something really different financial regulation in the United States.
It seems to be odd that there are already detailed plans for how to change financial regulation in the United States, without a discussion of some pretty fundamental questions:
1) Why are we regulating? Is it to protect consumers? Is it to insure that “bad guys” be punished? Is it to deter future “bad guys”? Is it to prevent a collapse of the financial system?
All of these are legitimate reasons for regulation, but they may cause contradictory policy. For example, a system that focuses on punishing bad people is often too late to protect consumers.
Once we have an idea of what the bad thing is we are trying to prevent, then two questions follow
2) Who are the new regulators? What is the role of the Fed, the SEC, the Office o Thrift Supervision, etc??
3) What do we regulate? Is the purpose of regulation to provide information? To prevent bad behavior? to prevent risky behavior? to save people from themselves?