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I think American public policy has a hard time grappling with Wall Street because the financial sector has disproportionate lobbying power. Also, I don't think

by cadlin 14y ago

I think American public policy has a hard time grappling with Wall Street because the financial sector has disproportionate lobbying power. Also, I don't think most Americans care about how free from regulation the financial sector is. Most people have a feeling that Wall Street is screwing over everybody and there's nothing they can do about it. I'm not exactly sure who you mean by "we," either. Hacker News commenters?

jwb119 14y ago
> the financial sector has disproportionate lobbying power. I'm not sure that's true. If Wall Street really had some super lobbying power Dodd-Frank and Sarbanes-Oxley wouldn't have passed in their current forms. Regulating Wall Street is a pretty easy position to take if you're a politician.
- danielweber 14y ago
  The sophisticated firms just see those regulations as another challenge. I usually don't call for increased salaries for government workers, but the people regulating Wall Street probably need to be making near-mid-six-figure salaries. Otherwise the ones who are good at their job will just get hired away by Wall Street.
  - penny500 14y ago
    Well, you'd have to increase the salaries of Congress to that level, and that is probably politically unfeasible.
- pyoung 14y ago
  The reaction to SOX by Wall Street was fairly mixed, some liked it because it meant the could put more trust in corporate financial statements. Some did not support the bill because of the usual straw man argument that 'regulation makes us less competitive'. Regardless, the passage of the bill does not say anything about the lobbying power of Wall Street, because WS was fairly mixed on it to begin with. Regarding Dodd-Frank, many people, myself included, believe that that bill was watered down considerably, largely due to the pressure of Wall Street lobbyists. In fact, in the end, a number of Wall Street groups ended up supporting the legislation, largely because they were concerned that if Dodd-Frank didn't pass, then new, more strict regulations would be proposed in the future. Wall Street contributes gobs of money to campaigns and has some of the most powerful lobbyists in Washington. Considering how unpopular they were in the recession fallout, the fact that the only major retribution was Dodd-Frank is a testament to how much influence the wield.
  - penny500 14y ago
    How is "regulation makes us less competitive" a straw man argument? If your Singaporean or European competitors operate under a set of different and less stringent rules, that wouldn't increase your costs to doing business (and in effect making you less competitive relative to foreign competitors)? Even the regulators know about the costs of Dodd-Frank.
    - pyoung 14y ago
      I think Singapore does so well because of the low taxes and because it is one of the few Asian countries in that region that isn't hampered by corruption. Europe's economies are way too diverse to group together, some of them are 'business friendly', some of them are not. The 'Celtic Tiger' was largely due to low taxes, and hasn't turned out too well (most of Europe is hurting right now), so I am not sure why we should aspire to emulate them. Regulatory policies have little to do with their success (but a lot to do with their failures, in the case of Ireland). I think most people agree that over-regulation is a bad thing. What I take issue with is when political groups and lobbyists scream 'regulation makes us less competitive' anytime regulation is mentioned. The fact is it might increase the costs of doing business a little bit, but it also might mean that my air and water aren't horribly polluted (see Beijing air quality) or that I can count on my retirement account actually being there when I need it. I feel like one side is trying to find a good balance, while the other is being completely obstructionist. The end result is watered down regulatory policies that increase the complexity and costs of doing business, while at the same time, being completely ineffective. One major issue with this result is that this greatly benefits entrenched players, as they are already adept at navigating complex regulatory environments (which keep out new entrants) but in the end, they aren't actually affected by the regulations in any meaningful way.
      - rayiner 14y ago
        The US is a model of reaching the right regulatory balance. No joke. The Asian countries are headed in the direction of more regulation as their economies mature and the naturally explosive growth of new industrialization transitions to a sustainable economy. Meanwhile, after decades of stifling over regulation, in the 1990s and 2000s Western Europe has liberalized it's economic policies and become more like the US. Australia has always been like the US and has been very successful for it.
- enraged_camel 14y ago
  Note that Sarbanes-Oxley was passed after a major scandal, and Dodd-Frank was passed after a financial meltdown that spanned the globe. What this shows is that Wall Street has America by the balls, and as long as they don't squeeze too tightly, there aren't going to be any restrictions on their behavior.
- Evbn 14y ago
  SOX hassles businesses, not Wall Street.

by cadlin 14y ago

jwb119 14y ago

> the financial sector has disproportionate lobbying power. I'm not sure that's true. If Wall Street really had some super lobbying power Dodd-Frank and Sarbanes-Oxley wouldn't have passed in their current forms. Regulating Wall Street is a pretty easy position to take if you're a politician.

danielweber 14y ago
The sophisticated firms just see those regulations as another challenge. I usually don't call for increased salaries for government workers, but the people regulating Wall Street probably need to be making near-mid-six-figure salaries. Otherwise the ones who are good at their job will just get hired away by Wall Street.
- penny500 14y ago
  Well, you'd have to increase the salaries of Congress to that level, and that is probably politically unfeasible.
pyoung 14y ago
The reaction to SOX by Wall Street was fairly mixed, some liked it because it meant the could put more trust in corporate financial statements. Some did not support the bill because of the usual straw man argument that 'regulation makes us less competitive'. Regardless, the passage of the bill does not say anything about the lobbying power of Wall Street, because WS was fairly mixed on it to begin with. Regarding Dodd-Frank, many people, myself included, believe that that bill was watered down considerably, largely due to the pressure of Wall Street lobbyists. In fact, in the end, a number of Wall Street groups ended up supporting the legislation, largely because they were concerned that if Dodd-Frank didn't pass, then new, more strict regulations would be proposed in the future. Wall Street contributes gobs of money to campaigns and has some of the most powerful lobbyists in Washington. Considering how unpopular they were in the recession fallout, the fact that the only major retribution was Dodd-Frank is a testament to how much influence the wield.
- penny500 14y ago
  How is "regulation makes us less competitive" a straw man argument? If your Singaporean or European competitors operate under a set of different and less stringent rules, that wouldn't increase your costs to doing business (and in effect making you less competitive relative to foreign competitors)? Even the regulators know about the costs of Dodd-Frank.
  - pyoung 14y ago
    I think Singapore does so well because of the low taxes and because it is one of the few Asian countries in that region that isn't hampered by corruption. Europe's economies are way too diverse to group together, some of them are 'business friendly', some of them are not. The 'Celtic Tiger' was largely due to low taxes, and hasn't turned out too well (most of Europe is hurting right now), so I am not sure why we should aspire to emulate them. Regulatory policies have little to do with their success (but a lot to do with their failures, in the case of Ireland). I think most people agree that over-regulation is a bad thing. What I take issue with is when political groups and lobbyists scream 'regulation makes us less competitive' anytime regulation is mentioned. The fact is it might increase the costs of doing business a little bit, but it also might mean that my air and water aren't horribly polluted (see Beijing air quality) or that I can count on my retirement account actually being there when I need it. I feel like one side is trying to find a good balance, while the other is being completely obstructionist. The end result is watered down regulatory policies that increase the complexity and costs of doing business, while at the same time, being completely ineffective. One major issue with this result is that this greatly benefits entrenched players, as they are already adept at navigating complex regulatory environments (which keep out new entrants) but in the end, they aren't actually affected by the regulations in any meaningful way.
    - rayiner 14y ago
      The US is a model of reaching the right regulatory balance. No joke. The Asian countries are headed in the direction of more regulation as their economies mature and the naturally explosive growth of new industrialization transitions to a sustainable economy. Meanwhile, after decades of stifling over regulation, in the 1990s and 2000s Western Europe has liberalized it's economic policies and become more like the US. Australia has always been like the US and has been very successful for it.
enraged_camel 14y ago
Note that Sarbanes-Oxley was passed after a major scandal, and Dodd-Frank was passed after a financial meltdown that spanned the globe. What this shows is that Wall Street has America by the balls, and as long as they don't squeeze too tightly, there aren't going to be any restrictions on their behavior.
Evbn 14y ago
SOX hassles businesses, not Wall Street.