Regulatory or Market Failure?
Freeman contributor Gerald O’Driscoll’s ThinkMarkets blog post on the failure of regulation in the current economic turmoil is worth reading. Here’s a taste:
With the exception of health care, financial services is the most highly regulated industry in America (and, generally speaking, in all developed countries). No segment of the industry escaped regulation….We have witnessed a great failure, but it was a failure of regulation. No statutory deregulation has occurred in financial services since 1999. And Gramm-Bliley-Leach, contrary to myth, did not repeal the Glass-Steagall Act of 1933. Nor did it effectively lighten regulation, but re-arranged the regulatory chairs and formalized the melding of financial services that had already occurred.
