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Markets usually do this, by finding ways around the regulations. In the early 20th century, trust companies could get around bank regulations, so they made risk
by byrneseyeview 18y ago
Markets usually do this, by finding ways around the regulations. In the early 20th century, trust companies could get around bank regulations, so they made riskier loans and grew faster, which worked well for a while. And hedge funds do that now -- many of them offer investment banking services (e.g. market making, debt structuring, direct investment/underwriting, etc.) without the same set of rules as regular banks.
- eru 18y agoYes. But they are opaque. Mandating transparency (and only transparancty) could be one of the few good regulation. Though I heard that some besieged investment banks have been disclosing their obligations fast - to restore or keep confidence in their liquidity. (I'd have to re-read the Economist for details.)