The Key to Efficient Regulation? Less is More
Regulatory relief has been enacted by Congress — and while this is certainly a great first step, there’s more to be done to cure the regulatory overdose that has been building over the last 30 years.
Financial regulation is in serious need of a comprehensive overhaul. It suffers from too many laws and rules, too many regulatory agencies with too few resources and undercompensated regulators expected to overachieve and prevent the impossible. While regulatory judgments should be informed by adherence to rules and the achievement of financial ratios, it remains clear that profits, the right capital levels or stress test results are not sufficient to determine long-term financial soundness or the quality of the regulatory system. Does anyone believe that that Bear Sterns and Lehman Brothers would be in business today if they had simply had 3% more capital?
