April 22, 2010

Timing is everything...

In the debate over Financial Regulatory reform (or, as I like to call it, Financial Re-Regulation) a troubling theme has popped up from even those who support reform (tacitly, at least). Basically, there are a number of forces saying we're moving too fast and we need to be more deliberate with regard to changes to the regulatory framework. To support this idea, they talk about the 1907 Panic and the time between it and the creation of the Federal Reserve System. Then there were the reforms during the Depression and the lag there was about four years.

Here's the problem with this argument... we now have access to historical data on panics and depressions going back to the 19th century that's very easy to find. Our ability to evaluate and make changes should be much faster now. In short, we know what needs to be done to create a viable framework that will allow this country to prosper without the occasional market dislocations that lead to economic shocks.

We are more than 2 years since the collapse of Bear Stearns. This isn't at all too fast. If anything, it's moving more slowly than it really should. This isn't an issue where we need to reinvent the wheel...

Posted by mcblogger at April 22, 2010 01:50 PM

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