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This is why we have regulators. It's the regulators and the people's elected representatives who allowed the big banks to grow "too big to fail". You can't expe

This is why we have regulators. It's the regulators and the people's elected representatives who allowed the big banks to grow "too big to fail". You can't expect banks to self-regulate. The competitive, zero-sum nature of the financial markets means that a company that voluntarily hamstrings itself will likely end up being eaten by those who don't. We need regulators to establish the rules and set the boundaries. The problem is that we have them but they failed to do their job. It's like sending a man with a rifle to protect a herd of goats from a leap of leopards. If the man decides to go to sleep and the leopards come along and eat some of the goats, who do you blame? Do you blame the leopard for being a leopard or do you blame the man for sleeping on duty?

danielweber 13y ago
The sad thing is we really do need better banking regulation, but even this thread is full of people who are just angry and think 1) something must be done 2) this is something 3) therefore we should do it. I think we should pay government regulators like $400,000 a year. That way instead of having the C students from Harvard's class trying to regulate the A students, you can grab some of the A students to pull into the regulatory role.
- jackgavigan 13y ago
  I just think that simply holding them accountable would be a good first step. Say what you like about Dick Fuld but he lost both his job and the majority of his wealth when Lehman Bros went under. Have any banking regulators been even demoted for letting the financial system come to the brink of collapse on their watch? http://www.businessweek.com/articles/2013-09-12/where-is-dick-fuld-now-finding-lehman-brothers-last-ceo http://www.businessweek.com/articles/2013-09-12/where-is-dic...
  - danielweber 13y ago
    "Hold them accountable" is doing an amazing amount of lifting there. Who is "them"? For what are they being "held accountable"? I do think the transition of the investment firms from partnerships to publicly traded companies was a bad move, but I have no reason to strongly believe it would have stopped the previous financial crisis. Goldman Sachs made a lot of money betting against the bubble, remember. Lehman wasn't bailed out, while other companies were. There was little rhyme or reason do which companies did and did not get saved. This wasn't necessarily bad, as it seemed that firms had gotten the expectation of a bailout and were continuing their risk-acceptance behaviors, but the collapse of Lehman is generally considered to be the immediate cause of credit drying up nearly instantly for everybody. The rulebook had changed and people snapped from way too risk-accepting to way too risk-averse.
    - jackgavigan 13y ago
      > Who is "them"? The regulators. > For what are they being "held accountable"? For failing to regulate the industry properly. Basically, it boils down to this: "Hello, Mister Banking Regulator. Don't sit down. See this financial crisis here? The one where the government had to step in and bail out the banks? Well, it happened on your watch. You were supposed to prevent shit like this from happening. You're fired. Close the door behind you."
LargeWu 13y ago
See: http://en.wikipedia.org/wiki/Regulatory_capture http://en.wikipedia.org/wiki/Regulatory_capture
- jackgavigan 13y ago
  Regulatory capture is just one form of regulatory failure.

danielweber 13y ago

The sad thing is we really do need better banking regulation, but even this thread is full of people who are just angry and think 1) something must be done 2) this is something 3) therefore we should do it. I think we should pay government regulators like $400,000 a year. That way instead of having the C students from Harvard's class trying to regulate the A students, you can grab some of the A students to pull into the regulatory role.

jackgavigan 13y ago
I just think that simply holding them accountable would be a good first step. Say what you like about Dick Fuld but he lost both his job and the majority of his wealth when Lehman Bros went under. Have any banking regulators been even demoted for letting the financial system come to the brink of collapse on their watch? http://www.businessweek.com/articles/2013-09-12/where-is-dick-fuld-now-finding-lehman-brothers-last-ceo http://www.businessweek.com/articles/2013-09-12/where-is-dic...
- danielweber 13y ago
  "Hold them accountable" is doing an amazing amount of lifting there. Who is "them"? For what are they being "held accountable"? I do think the transition of the investment firms from partnerships to publicly traded companies was a bad move, but I have no reason to strongly believe it would have stopped the previous financial crisis. Goldman Sachs made a lot of money betting against the bubble, remember. Lehman wasn't bailed out, while other companies were. There was little rhyme or reason do which companies did and did not get saved. This wasn't necessarily bad, as it seemed that firms had gotten the expectation of a bailout and were continuing their risk-acceptance behaviors, but the collapse of Lehman is generally considered to be the immediate cause of credit drying up nearly instantly for everybody. The rulebook had changed and people snapped from way too risk-accepting to way too risk-averse.
  - jackgavigan 13y ago
    > Who is "them"? The regulators. > For what are they being "held accountable"? For failing to regulate the industry properly. Basically, it boils down to this: "Hello, Mister Banking Regulator. Don't sit down. See this financial crisis here? The one where the government had to step in and bail out the banks? Well, it happened on your watch. You were supposed to prevent shit like this from happening. You're fired. Close the door behind you."

LargeWu 13y ago

See: http://en.wikipedia.org/wiki/Regulatory_capture http://en.wikipedia.org/wiki/Regulatory_capture

jackgavigan 13y ago
Regulatory capture is just one form of regulatory failure.