Thursday, October 23, 2008

On Regulation in the Financial Markets

Some people have suggested to me that regulation is not neccessarily a good solution just because the private market is failing, like in the mortgage crisis. Regulations can be poory applied, or even gamed, thus meaning more wealth for the financial industry (which is what we are trying to avoid).

Well, don't need to listen to me on whether there was regulation that could improve outcomes. Now the Maestro is saying we should have some more regulation, too.

Greenspan softened his longstanding opposition to many forms of financial market regulation, acknowledging in an exchange with Waxman that he was "partially" wrong in his belief that some trading instruments, specifically credit default swaps, did not need oversight.

Economists are still supporting the buying of preferred shares over the mortgage buy-back, though. Guess you can't win 'em all.

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