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I agree that regulation can and should be a good thing, to protect the participants of the financial system. But in the past decades we've seen a (lobbied) shif
by tcgv 5y ago
I agree that regulation can and should be a good thing, to protect the participants of the financial system. But in the past decades we've seen a (lobbied) shift towards deregulation, with catastrophic results:
> Say what you like about regulators - and they regularly mess up big - but they ensure that 99% of consumer finance companies have the cash to back up deposits because they are forced to!
In the 2008 subprime mortgage crisis not long ago the US government was forced to bail out several banks, basically transferring the cost of that mess to tax payers, so I disagree with this statement.
- dkasper 5y agoI think you're missing a key point that because of the 2008 crisis the regulations were updated. Bank reserves are higher now than pre-2008. So in fact this is basically like the OP said, regulators regularly mess up, and then update the regulation.
- lupire 5y agoIIRC the Fed is currently removing reserve requirementa because they don't believe they are useful. Banks have reserves now because the government printed so much money to give them that they can't put it to any use.