Most Far-Reaching Federal Overhaul of Regulatory System Since 1929 Proposed

[Unspeaked]

LINK (http://www.latimes.com/news/politics/la-fi-paulson1apr01,0,3103342.story)


Treasury Secretary Paulson urges more power for Federal Reserve

In a 218-page blueprint unveiled today, Paulson calls for a massive overhaul that would eliminate some federal agencies. He emphasizes that the market must be stabilized before any big changes are made.

WASHINGTON -- Treasury Secretary Henry Paulson today unveiled a 218-page blueprint for regulatory reform that would represent the largest federal overhaul since the Great Depression.

[adroit]

Yes, because that's exactly what you need. A more powerful federal reserve :rolleyes:

[Unspeaked]

Yes, because that's exactly what you need. A more powerful federal reserve :rolleyes:

Did you get to this bit at the very end?

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, called Paulson's plan a "constructive step forward" but said the Federal Reserve needs even more authority.

:D

[Desertrat]

Another case where those who created a problem are being called upon to solve it.

'Rat

[solvs]

Yeah, I don't think this is going to help either, and apparently, we're not alone in thinking that:

Winners and Losers in Paulson’s New Regulation Plan (http://blogs.wsj.com/deals/2008/03/31/winners-and-losers-in-paulsons-new-regulation-plan/?mod=WSJBlog)
Lobbyists, Small Banks Attack Plan For Markets (http://online.wsj.com/public/article/SB120697114969676991.html?mod=blog)
Doubts Greet Treasury Plan on Regulation (http://www.nytimes.com/2008/04/01/business/01regulate.html?_r=1&ex=1364702400&en=60b16dc09516fef8&ei=5090&partner=rssuserland&emc=rss&pagewanted=all&oref=slogin)
What All These Cries For "More Regulation!" Actually Mean (http://www.alleyinsider.com/2008/4/what_all_these_cries_for_more_regulation_actually_mean)

I don't know if I agree with all of that, and some of it I agree with for different reasons, but it seems there are no easy answers, and it's (pardon the pun) a day late and a dollar short.

[Desertrat]

I tend to agree with the caveats of the Silicon Insider article.

I've read one commentary about unintended consequences, sorta tied to Sen. Dodd's comment: "“On the one hand, it would allow the Fed to examine all financial companies — not just banks — to be sure they are not posing a risk to the overall financial system.”.

The "all financial companies" thing. The idea is that if there is more restriction than the companies like, they'll move to where regulation is less onerous. And this world of derivatives and "financial instruments" is already very much international in scope. Plus, you have the many trillions of dollars already in the hands of the Sovereign Wealth Funds of other countries. Money goes to where money is. We could quite possibly see the centers of financial power moving from New York City and London to places like Hong Kong, Singapore or Dubai.

[Unspeaked]

We could quite possibly see the centers of financial power moving from New York City and London to places like Hong Kong, Singapore or Dubai.

I think this is already happening.

The question is, is is sustainable?

[Desertrat]

Unspeaked, I ran across a good comment just today: Money and trade flow to where it's friendly toward money and trade. Singapore has been a trading point since Raffles first envisioned it. Its banking "industry" is growing at a rate of 30% per year, beginning at a point roughly one-third that of Switzerland. Fifteen years back, lots of people were sneering at China's economic growth.

Check out the amounts of money of the Sovereign Wealth Funds of the middle east's oil exporters...

Whether societal or governmental, the policies of the U.S. and of England have been 180 degrees from the maintenance of high economic power. Exporting money does not strengthen a nation.

'Rat

[Unspeaked]

Money and trade flow to where it's friendly toward money and trade. Singapore has been a trading point since Raffles first envisioned it.

I remember seeing a segment on Singapore on 60 Minutes some years back showing how simple it was to start a business there.

They interviewed a few Americans that had moved there to start retail ventures in large, multi-story shopping malls. The process was as hassle-free as putting down a deposit for a space and filling out a single vendor application. It wasn't much more difficult for those that wanted an office space rather than a retail space.

The gist of it was, someone could move to Singapore and have a working business up and running in about a week, while the same process took several months - at least - in the US.

Though I did find this impressive, and the perfect way to treat fledgling business in an up-and-coming economy, I can't help but wonder if this might end up causing more harm than good in the future...

[Desertrat]

"...this might end up causing more harm than good in the future..."

How so? It's already against the law to lie, cheat and steal when doing business. You'll note that Singapore is rather well known for low tolerance of that sort of thing. That government knows that its reputation as a good place to do business depends on "good" business.

You don't spit on the sidewalk there, nor chew gum. That sort of thing creates an atmosphere of not messing with the law in other activities...

'Rat

[Unspeaked]

"...this might end up causing more harm than good in the future..."

How so?


I just wonder if it may be too difficult to keep the right balance between openness and regulation as the number of business continue to grow.

I'm not saying this is likely, just that it seems like a possible obstacle.

[Desertrat]

I don't see a connection between numbers of businesses and need for regulation.

Always remember that many of our own regulations in the US came at the behest of larger corporations, seeking to limit competition. Same sort of deal for trade licensing of, say, doctors or plumbers. Limit the competition so that those who are in the business can make more money.

'Rat

[Eraserhead]

Though I did find this impressive, and the perfect way to treat fledgling business in an up-and-coming economy, I can't help but wonder if this might end up causing more harm than good in the future...

Singapore is rich now they have a nominal GDP of US$39'000 a year. The city also has so many high end boutiques its not even funny (its actually really annoying when your trying to find a supermarket, and you are just going past yet another branch of Dior or something ;)).

The other reason that the regulation is so light is that everybody obeys the rules, just because. For example no-one walks on the wrong side of the escalator, or drinks water on the metro, or jaywalks, so they only need very light regulation to stop people cheating the system.

[solvs]

Always remember that many of our own regulations in the US came at the behest of larger corporations, seeking to limit competition.
And there are rules against such things, so what's your point? That some regulations are bad because some bucked the system to do exactly the opposite of what regulation is there in the first place for, so we should get rid of all of them? Even the good ones that do work, or the ones that could if run better? Is that like electing people who believe gov is the problem so they can prove it? :confused:

Don't we want at least some oversight and regulation? Isn't that part of the problem now? Lack of oversight and regulation? Spinach, dog food, toys, mines, Blackwater, KBR... you really want less regulation and enforcing what we already have? :eek:

[Eraserhead]

Don't we want at least some oversight and regulation? Isn't that part of the problem now? Lack of oversight and regulation? Spinach, dog food, toys, mines, Blackwater, KBR... you really want less regulation and enforcing what we already have? :eek:

If you have no regulation you have anarchy, and you have to spend a vast amount of time working out who the reputable companies are.

[solvs]

If you have no regulation you have anarchy, and you have to spend a vast amount of time working out who the reputable companies are.

But that's what some asking for. More deregulation. Because current regulation isn't working. So we should just throw all of it out. Makes perfect sense. :confused:

Defending a broken system (http://www.thedailybanter.com/tdb/2008/04/defending-a-bro.html)

[Desertrat]

I'm not saying regulation is inherently bad. My point is that calls for regulation too often aren't for the apparent purpose (the meat-packing industry, e.g.), or that proposed regulations are not thought through as to unintended consequences (banking).

It's patently obvious that some regulations have been bad. Deregulation of some controls has always reduced prices via increased competition in the market place, leading to more availability. The best example is natural gas.

'Rat

[LethalWolfe]

It's patently obvious that some regulations have been bad. Deregulation of some controls has always reduced prices via increased competition in the market place, leading to more availability. The best example is natural gas.

'Rat
"Always" is a dangerous word. ;)

I'm still waiting for the telecommunications deregulation of the '90s to reduce my cable bill and foster competition in the radio, TV, newspaper, etc., markets. So far all the deregulation has done is allow massive consolidation of media ownership in the US. 20 years ago there were something like 80 major companies that owned media outlets in the US. Today there are 5 or 6 conglomerates that pretty much own everything(those same 5 or 6 conglomerates also own the majority of the most visited web sites). Never underestimate the power of greed. Why compete with ESPN when you can just buy ESPN? Why try to make you own ISP when you can just buy AOL? Why compete when acquiring, downsizing, and consolidating gives quicker results on the bottom line?


Lethal

[walangij]

If I'm not mistaken, this plan to overhaul the system was planned for a while now, it's only that the economy is in a downturn that it is in the press. I was reading that it was being worked on for a few years now. If this regulatory overhaul was proposed a few years ago, people wouldn't care as much.

[Desertrat]

Lethal, I said some controls. :) My view is that if controls enhance competition, the controls can be defined as good. If a lack of controls reduces competiton, some answer is needed. From what I've observed, however, government regulations tend to reduce competition over the longer time frame.

Homo sap's a predator. Doesn't matter if it's deer hunting or building a media or banking empire. The underlying motivations are the same.

'Rat

[solvs]

From what I've observed, however, government regulations tend to reduce competition over the longer time frame.
Any examples?