"Regulatory Arbitrage" will always be with us because the banks can afford to employ the really bright people. No regulatory regime can ever be tight enough, even though the egotists who dream them up insist that they can.
Couldn't agree more, Wat.
If the government hadn't lost control of the money supply and if banks had needed to convince/assure their investors and depositors that they were secure rather than relying on regulation, then the current crisis would never have happened.
Perhaps I have the wrong end of the stick here, but surely it is lack of regulation that got us into this financial mess into the first place?
The government didn't "lose control of the money supply", they deliberatly engineered a credit boom.
Mr Popodopoulos, you should read the article again because you definitely got the wrong end of the stick.
The problem with blanket regulations is that the end result is forgotten and the game becomes the ticking of boxes regardless of the outcome, because everyone has to do the same. In the case of the financial crisis, it would be the proper management of risk which was left out.
I would have thought that making regulations optional would actually increase their worth because only the useful ones would be kept, and the pressure to follow those would come from the end customers. It would also probably mean job losses in the regulation industry, and as you cannot have that, it is unlikely to happen.
The fact that they keep the banana regulation because no one objects, and not because it has any use at all just shows how far down the road of idiocy we have gone.
No objections? NO OBJECTIONS? Did they read a newspaper in this country at any point over the past few years?
No story has provided more mockery of EU regulation than the bendy fruit saga.
http://www.lettersfromatory.com
AntiCitizenOne,
Yes, I thought as I wrote that "the government lost control of the money supply" that I should have put it in a way that acknowledged their active involvement in the credit boom.
In fact, I think both things are true. They misguidedly engineered a boom, but there was also an element of them simply not understanding the extent of it. In other words, not only were they stupid, but they were too stupid to realise their stupidity. That's Gordon Brown for you!
I am a rabid environmental regulator. I am also a fastidious environmental planner. I can hear the hisses coming from you site! lol Planning implies that you have studied a problem area, such as sand dune protection or banks, well. Good regulators promulgate regulations based on good plans. This usually leads to sensible regulations. Not always. Nothing is perfect. The current economic crisis seems to me due largely to failed, imperfect plans. Analysts developing mortgage backed securities did not include the possibility of housing dropping in demand/price in their models. So, the industry could not self-regulate properly.
http://marketdisaster.blogspot.com/
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