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passing the buck (while keeping tight hold of the bucks) January 13, 2010

Posted by Bradley in : financial regulation , trackback

Reading reports of today’s hearings at the Financial Crisis Inquiry Commission I am a bit perplexed by the suggestions that part of the problem was that regulators failed to keep up with new sophisticated financial products. This from members of an industry that dedicated enormous effort and money over many years to promoting the idea that governmental regulation shouldn’t interfere too much with market activity, and in particular that it should not stifle useful innovation. And, moreover, that it should be the market which would determine whether innovations were useful or not, rather than regulators. Now, it is pretty inevitable that businesses will put effort into lobbying (I started today looking at a fascinating study of how the tobacco industry worked to influence the incorporation of mandatory impact assessment (of a type that would weight economic interests heavily) into EU policy-making) but there’s something rather dishonest for people who have successfully lobbied for limited regulation to then turn round and blame everyone else for not regulating them enough.

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