Did We Waste The Crisis? Is the Pope Catholic?
Posted by Larry Doyle on August 13, 2013 8:16 AM |
In late November 2008, incoming White House chief of staff Rahm Emanuel told a group of corporate executives, “you never want a serious crisis to go to waste.”
Well, here we sit almost 5 years later. Is there any doubt that in terms of utilizing the crisis to implement the necessary meaningful financial regulatory and structural reforms, we have, in fact, wasted this crisis? Come on, do we even have to ask?
Adam Davidson of The New York Times would seem to believe the same as he wrote the following in a recent commentary:
Remarkably, five years after the crisis, the health of the financial industry is just as hard to determine. A major bank or financial institution could meet every single regulatory requirement yet still be at risk of collapse, and few of us would even know it.
Despite endless calls for change, many of the economists I’ve spoken with have lamented that the reports that banks issue about their finances remain all but useless. The sprawling Dodd-Frank Act, which rewrote banking regulation in 2010, didn’t resolve things so much as inaugurate a process of endless rules-writing by regulators.
Meanwhile, the European Union is in the early stages of figuring out how it will change the way it regulates banks; and the gargantuan issue of coordinating regulations across borders has only barely begun.
All of these regulatory decisions are complicated, in part, by a vast army of financial-industry lobbyists that overwhelms the relatively few consumer advocates.
I strongly believe that disparate views are put forth by those within the industry in order to intentionally muddy the waters and allow the can to be further kicked down the road.
Are there points of agreement amid the opacity that defines Wall Street and Washington currently? Davidson highlights that the few points of agreement among two economists — Anat Admati and Charles Calomiris — on opposite ends of the regulatory spectrum are,
. . . that banks borrow too much, that the government rules are too confusing and that the public has been misled.
No doubt about those points as well.
Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.
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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.