Financial Regulation
Each week (or day), I read about the financial sins of bankers and investors all over the world. Countries (their governments) talk of addressing the problem with more regulation, more oversight. Of course, we need some oversight, but please do not take away the power of the smaller players to regulate if and when the big regulators move in. Example: the U.S. wants to move in and regulate their financial markets more right now. This means the banks and the bankers should expect more oversight. Yet, the problem with the current proposal is, the federal government in its desire to regulate, will take away the ability of the states to regulate the rogue individuals in their own states and would consolidate power into one federal agency. This would be a bad trade-off. The states know what is happening in their area. North Carolina, a leader in addressing predatory lending issues, knows what is happening in Cackalack. Let them alone. Ohio knows Ohio. Michigan knows Michigan. Maryland knows Maryland. In other words, regulate but do not take away the power from the states. Currently, this is what is about to happen. In a huge case last year, Cuomo v. Clearinghouse Association, the U.S. Supreme Court left open the possibility that states could regulate nationally chartered banks through enforcement of their own lending laws (consumer laws). It was a big victory, for once, for the little guy. The banks sprung into action and are not hoping that the federal government will take over regulation of national banks, by statute because they know the states are about to slap them with lawsuits to get them in line with the laws in the various states. It is shrewd move by the banks which is why the states must fight to keep their own powers regardless of what the federal government does in the area of regulation. |
My gut says, the global financial system, needs more regulation. Yet, deep inside the recesses of my mind where common sense and pragmatism dwells, I don't think more regulation by federal government (statism, in the words of writer, George Will), is the solution. This is not just because the federal government is enormously unsuccessful in prosecuting and regulating the bad acts of the financial moneychangers, this is because when big governments get in the act, smaller actors with more of an attachment to the bad acts, lose their ability to address the problem.