Thread: Too Few Regulations?

Too Few Regulations? No, Just Ineffective Ones

THERE is a misconception that President Bush’s years in office have been characterized by a hands-off approach to regulation. In large part, this myth stems from the rhetoric of the president and his appointees, who have emphasized the costly burdens that regulation places on business.

But the reality has been very different: continuing heavy regulation, with a growing loss of accountability and effectiveness. That’s dysfunctional governance, not laissez-faire.

When it comes to financial regulation, for example, until the crisis of the last few months, the administration did little to alter a regulatory structure that was built over many decades. Banks continue to be governed by a hodgepodge of rules and agencies including the Office of the Comptroller of the Currency, the international Basel accords on capital standards, state authorities, the Federal Reserve and the Federal Deposit Insurance Corporation. Publicly traded banks, like other corporations, are subject to the Sarbanes-Oxley Act.

And legislation that has been on the books for years — like the Home Mortgage Disclosure Act and the Community Reinvestment Act — helped to encourage the proliferation of high-risk mortgage loans. Perhaps the biggest long-term distortion in the housing market came from the tax code: the longstanding deduction for mortgage interest, which encouraged overinvestment in real estate.

In short, there was plenty of regulation — yet much of it made the problem worse. These laws and institutions should have reined in bank risk while encouraging financial transparency, but did not. This deficiency — not a conscientious laissez-faire policy — is where the Bush administration went wrong.

It would be unfair, however, to blame the Republicans alone for these regulatory failures. The Democrats have a long history of uncritically favoring expansion of homeownership, which contributed to the excesses at Fannie Mae and Freddie Mac, the humbled mortgage giants.

The privatization of Fannie Mae dates back to the Johnson administration, which wanted to get the agency’s debt off its books. But now, of course, the government is on the hook for the agency’s debt. As late as this spring, Congressional Democrats were pushing for weaker capital requirements for the mortgage agencies. The regulatory reality was that few politicians were willing to exchange short-term economic gains — namely, higher rates of homeownership — for protection against longer-term financial risks.

Still, the Bush administration’s many critiques of regulation are belied by the numbers, which demonstrate a strong interest in continued and, indeed, expanded regulation. This is the lesson of a recent study, “Regulatory Agency Spending Reaches New Height,” by Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University, and Melinda Warren, director of the Weidenbaum Center Forum at Washington University. (Disclosure: Ms. de Rugy’s participation in this study was under my supervision.) For the proposed 2009 fiscal budget, spending by regulatory agencies is to grow by 6.4 percent, similar to the growth rate for last year, and continuing a long-term expansionary trend.

For the regulatory category of finance and banking, inflation-adjusted expenditures have risen 43.5 percent from 1990 to 2008. It is not unusual for the Federal Register to publish 70,000 or more pages of new regulations each year.

In other words, financial regulation has produced a lot of laws and a lot of spending but poor priorities and little success in using the most important laws to head off a disaster. The pattern is reminiscent of how legislators often seem more interested in building new highways — which are highly visible projects — than in maintaining old ones.

The biggest financial deregulation in recent times has been an implicit one — namely, that hedge funds and many new exotic financial instruments have grown in importance but have remained largely unregulated. To be sure, these institutions contributed to the severity of the Bear Stearns crisis and to the related global credit crisis. But it’s not obvious that the less regulated financial sector performed any worse than the highly regulated housing and bank mortgage lending sectors, including, of course, the government-sponsored mortgage agencies.

In other words, the regulation that we have didn’t work very well.

There are two ways to view this history. First, with the benefit of hindsight, one could argue that we needed only a stronger political will to regulate every corner of finance and avert a crisis.

Under the second view, which I prefer, regulators will never be in a position to accurately evaluate or second-guess many of the most important market transactions. In finance, trillions of dollars change hands, market players are very sophisticated, and much of the activity takes place outside the United States — or easily could.

Under these circumstances, the real issue is setting strong regulatory priorities to prevent outright fraud and to encourage market transparency, given that government scrutiny will never be universal or even close to it. Identifying underregulated sectors in hindsight isn’t a useful guide for what to do the next time.

Both presidential candidates have endorsed regulatory reform, but they have yet to signal that it will become a priority. That isn’t surprising. Fixing these problems may seem a very abstract way of helping the average citizen, and it will certainly require taking on special interests. It’s easier to tell voters that the regulators have taken care of last year’s problem, even if that accomplishes nothing for the future.

In the meantime, if you hear a call for more regulation, without a clear explanation of why regulation failed in the past, beware. The odds are that we’ll get additional regulation but with even less accountability and even less focus on solving our very real economic problems.

Even the NY Times is starting to catch on to the total bullshit being sold to us by McBama & Co falsely claiming that we've had a "free market" under George W. Bush and now we need "regulation."

So?

That's what I've been saying for YEARS (and a lot of other people too).

He makes the same central points that I've been making:

a) Bush is an INCOMPETENT FOOL
b) He's DROPPED THE BALL on regulation
c) No one's watching the foxes, and they're in the henhouse

Regulation means OVERSIGHT, son.

What the hell good do "laws" do if no one cares about 'em?

Originally Posted by nonsqtr

So?

That's what I've been saying for YEARS (and a lot of other people too).

He makes the same central points that I've been making:

a) Bush is an INCOMPETENT FOOL
b) He's DROPPED THE BALL on regulation
c) No one's watching the foxes, and they're in the henhouse

Regulation means OVERSIGHT, son.

What the hell good do "laws" do if no one cares about 'em?

Government laws don't do any good, I agree.

Clearly too many regulations. For the current fiasco, too many regulation in just two areas of the economy.

The whiny socialists in government forced the banks to issue loans to people who were going to have problems paying them back. It was easily seen that the sub-prime issue was going to come to a head exactly five years from the time the banks started issuing "interest only loans". People were working two jobs just to pay the interest payments. It was obvious what was going to happen when it came time to bump the payments to include principle amortization.

The other area of trouble has been obvious since the 80's.

We're forbidden, by our own government from drilling for oil where the friggin' oil is. Thus over three decades our economy became more and more dependent on the good will of our enemies. Can anything be more stupid than tha? What did our enemies do? They finally jacked oil prices up to $160 a barrel.

And that happened at a time when the sub-prime mortgage meltdown peaked.

So instead of the expectation of the banks that they'd be able to foreclose the failed mortgages and re-sell those properties into a rising market, they suddenly discovered that WAY MORE people were defaulting because they couldn't pay the mortgage and buy gas to get to work, too.

Thanks to the socialists and their love of government control over things they don't understand, but have FEELINGS about, we're seeing a minor meltdown of the economy.

Yeah, I said "minor". McCain was right, our economy's fundamental strength's aren't touched. Unlike the Carter stagflation era, we no longer carry large inventories to sell, relying instead on Just-In-Time manufacturing processes to reduce product lead time. This should prevent the massive layoffs we saw under that's idiot's ignorant reign.

Originally Posted by Freedom for All

Clearly too many regulations. For the current fiasco, too many regulation in just two areas of the economy.

The whiny socialists in government forced the banks to issue loans to people who were going to have problems paying them back. It was easily seen that the sub-prime issue was going to come to a head exactly five years from the time the banks started issuing "interest only loans". People were working two jobs just to pay the interest payments. It was obvious what was going to happen when it came time to bump the payments to include principle amortization.

The other area of trouble has been obvious since the 80's.

We're forbidden, by our own government from drilling for oil where the friggin' oil is. Thus over three decades our economy became more and more dependent on the good will of our enemies. Can anything be more stupid than tha? What did our enemies do? They finally jacked oil prices up to $160 a barrel.

And that happened at a time when the sub-prime mortgage meltdown peaked.

So instead of the expectation of the banks that they'd be able to foreclose the failed mortgages and re-sell those properties into a rising market, they suddenly discovered that WAY MORE people were defaulting because they couldn't pay the mortgage and buy gas to get to work, too.

Thanks to the socialists and their love of government control over things they don't understand, but have FEELINGS about, we're seeing a minor meltdown of the economy.

Yeah, I said "minor". McCain was right, our economy's fundamental strength's aren't touched. Unlike the Carter stagflation era, we no longer carry large inventories to sell, relying instead on Just-In-Time manufacturing processes to reduce product lead time. This should prevent the massive layoffs we saw under that's idiot's ignorant reign.

Horsehit!

You're full of it, son.

"They" didn't raise oil prices - WE did!!!

Haven't you been following the markets?

SPECULATORS are responsible for that! Not "our enemies". Our FRIENDS, you fool!!!

And if you let 'em keep drilling, they're just gonna do MORE of that!

They're just going to keep RIPPING YOU OFF.

So, STOP drilling, and START funding the alternative energy research that the Republicans have been obstructing for FORTY YEARS now.

THAT is the solution. NOT more drilling! And YOU, personally, can ride a bicycle to work, for all I care.

Originally Posted by nonsqtr

And YOU, personally, can ride a bicycle to work, for all I care.

No line better represents liberal thinking in my opinion. The Democrats may as well just run on the platform, "We're Democrats... Fuck You". It's this bitter, self-righteous reasoning that makes the Democrats worthy of an opposition with a healthy dose of ferocity. Obama and Company have finally put liberalism out in the open. The Democrats have stuck their collect neck out over the last week, probably because they're in a panic and in panicking drank their own KoolAid. Too bad its poisoned.

Originally Posted by Burning Giraffe

No line better represents liberal thinking in my opinion. The Democrats may as well just run on the platform, "We're Democrats... Fuck You". It's this bitter, self-righteous reasoning that makes the Democrats worthy of an opposition with a healthy dose of ferocity. Obama and Company have finally put liberalism out in the open. The Democrats have stuck their collect neck out over the last week, probably because they're in a panic and in panicking drank their own KoolAid. Too bad its poisoned.

See, this is where you guys keep MISSING THE POINT.

Here's the point: it is NO LONGER ACCEPTABLE for you, to run around doing "whatever you want, whenever you want".

No, son, your days of doin' that, are over.

You will now PLAY BY THE RULES, or you won't play at all.

That's how it works now.

A lot of you "rich types" got rich by RIPPING PEOPLE OFF, and we've looked the other way for a while, 'cause you kept it low-level and not too visible, and that was cool. We were willing to tolerate "a little" of it,

But, YOU GOT GREEDY. That wasn't ENOUGH for you. So, you started "changing the rules". Not in the open though - in the dead of night in the Vice President's office, with no one there but a bunch of oil executives.

And you started changing the meaning of WORDS in the English language. Suddenly, torture wasn't torture anymore, and an ex-post facto law wasn't an ex-post facto law.

And, you got RICH because of all this. A lot of you guys got FILTHY RICH because of all this. And that, is a matter of public record, and it is provable by ANYONE.

But now, you're fucking things up BIG-TIME. You got USED to all those little privileges you weren't supposed to have, and now 'cause you're so goddamn greedy, you want even MORE.

And now, unfortunately for you, the answer is not only NO, but we're gonna start taking AWAY all those little privileges you're not supposed to have.

You're gonna sit there and try to convince my friends to destroy my country by drilling for more oil? Fine. I'm gonna TAKE AWAY YOUR CAR, and then we'll see how clever you are. Got a bike? Fine. You can get to work.

Sorry pal, you are ENTIRELY missing the point if you believe that this is about anything but OPPORTUNITY.

The Republicans, want to accrete opportunity to themselves, and the Dems, want to spread it around.

And all I'm hearing out of the Republicans, is a bunch of whining and pissing and moaning, 'cause they don't get to have the ENTIRE pie.

Well, too f'in bad. Get used to living on one slice and one slice ONLY.

And if yo'ure clever enough to get two somehow, more power to ya - but you will NOT be doing it with my tax dollars.

'Kay?

Look - the reason I'm saying this, in this "way", is to communicate "raw feelings". This is not a partisan thing, that I'm trying to do here. I'm trying to show you how people FEEL. And, that's the part that needs to be addressed. People are TIRED of all this theoretical bullshit. They feel something, and they want it addressed.

Now, today, not two hours ago, I was just talkin' to a guy in Bristol PA. And, they're not doin' too well out there. The cold weather is settin' in. Everyone's havin' a hard time. Plenty of people in line at the food bank.

BG, every single ONE of those people, wants a job. The point is: there aren't any. The OPPORTUNITY doesn't exist. All right?

THAT is the point - that is the whole point. George W Bush and his idiot Republi-Cons have squandered away the national stock of OPPORTUNITY.

And that, is an unforgivable sin, in the land of opportunity.

See, so, you Republi-Cons are going to have to come to terms with this sentiment in the nation at large.

Truth is, you guys REALLY screwed up with Bush, and, it looks like you're screwing up AGAIN with McCain.

And, the People's eyes are wide open this time, and it's not gonna be an easy row for you guys to hoe this time. These Rovian-type lies aren't gonna over this time. No way pal, the people are PISSED and they're not listenin' to that crap anymore.

Trust me pal, it's the same out here in Burbank, as it is in Bristol PA.

The People, feel like they're being RIPPED OFF, and that's never a good thing.

Basically, what I have learned is, micro management is good?

Right?

Originally Posted by nonsqtr

Horsehit!

You're full of it, son.

"They" didn't raise oil prices - WE did!!!

Haven't you been following the markets?

SPECULATORS are responsible for that! Not "our enemies". Our FRIENDS, you fool!!!

Right.

That's why OPEC agreed to cut production by half a million barrels a day, because they want prices to go down.

I can't help it socialists are genetically immune to basic economics, but that doesn't mean I have to defend them

Drilling our own oil makes us independent of them drilling oil for us.

Only a fool can imagine they see complexity in that statement.

Originally Posted by nonsqtr

The People, feel like they're being RIPPED OFF, and that's never a good thing.

OF COURSE they're being ripped off.

Your job as a socialist is to lie your ass off to convince people it's not the socialists faults.

The socialists and social experimenters forced the sub-prime mortgage door open and put a boulder in it.

The socialists and communist affiliated eco-freaks stopped all new drilling and oil exploration in the US and even with gasoline at $4.00 a gallon they stupidly continue to insist that we don't need to use our own oil.

Those are the people ripping off the American public.

Go ahead, you pretend forcing banks to loan money to people who can't pay it back is the banker's fault, not the government making the rules.

Go ahead, you pretend it's more efficient and in our best interests to buy oil from people like Ahmadaboudajihad, Hugo, and Putin than it is to drill our own oil for our own consumption.

Go ahead, pretend that it's somehow intelligent for a nation with 1.5 trillion barrels of recoverable oil, which uses 20% of the world's oil, to buy oil from someone else.

The rest of us aren't that stupid and we'll continue to point out your lies and untruths.