Tuesday, May 22, 2012

Regulators Want More Money

From the HuffPost:
Two of the most important financial regulators in the country have a message for Congress: We need more money.
And my 4-year old daughter wants a pony. Given we created a brand new financial regulator, the Consumer Financial Protection Bureau, and they plan to spend $448 million next year, why don't we wait until one of these regulators actually creates some kind of thoughtful, new, regulation.

 What do they think they can do with more money? What rule-breaking is countenanced purely by a lack of resources? The many financial regulators need ideas and focus, not money. Clueless people always blame a lack of resources, which is why they are clueless.


Dan said...

You don't need money for regulation. You need money for supervision and resolution.

I think the lesson of the crisis was that the regulations and rules should be few and simple, and more resources should be devoted to supervision (understanding what's going on) and resolution (what to do in the event of a crisis). Regulations will always be gamed, risk will always be there. But it's imperative to have a plan for when Citi or Fannie fails and make sure the sector pays for the clean up costs. That requires having resources and hiring talent which costs money.

Mercury said...

That sounds reasonable enough Dan but as long as you have Too-Big-To-Fail all the regulation and supervision in the world won’t change the fact that that particular swan has no business flying.

As things now stand, I’m pretty sure the plan for the next FNM/FRE –sized failure is to sweep that under the government rug too. You may have noticed that the government wants to grow itself and spend more money in both good times and bad. Apparently there is no circumstance under the sun where the opposite is the right solution. Why, it’s almost like they’re primarily in business for themselves.

As Warren Buffett says: if you’ve been at the table for a while and haven’t figured out who the sucker is yet….

forestry investment said...

And my 8 year old wants a trip to Euro Disney outside Paris. In the UK, the regulators and the BOE also want more money. Aren't these the same regulators who also missed the crisis altogether? The same dopes who ignored years of warnings about Madoff? They can all pool their money from government holidays and there's their extra funding.

Leo said...

Eric, can I suggest that instead of posting this unending stream of superficial posts on regulation, you instead get a grip and actually study the field?

I respectfully suggest you read "An Introduction to Law and Regulation" by Bronwen Morgan and Karen Yeung. It's really a great overview and I have not doubt you will write more intelligent posts after reading it.