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Financial Regulatory Reform Made Easy

March 17, 2010

Washington pols and the talking heads in the industry are making financial regulatory reform seem so hard when it’s really easy. We need only 1 new regulation: you can’t be “too big to fail”. The minute you get that big, the gov’t steps in and sells off pieces of your silly a$$ till you’re small enough to fail w/out hurting the rest of us. In fact, we’ll throw you a going-away party!

Look, there’s regular old banks, and savings and loans which are regulated by the Federal Reserve System. They did not cause our current fiscal chaos.

The current financial doom was caused by investment ‘banks’ and insurance companies, and ratings agencies. These are not regulated by the Fed. Nor do they need to be regulated.

Let’s not get all Nanny State here.  This is still a capitalist economy. The non-Fed-regulated investment banks, insurance agencies and ratings companies should still be allowed to do whatever they please. I’d require that they disclose all their activities and kooky investment strategies prominently.  But as long as they do, let the buyer beware.

As long as they’re small enough that their failure through stupid investment tactics doesn’t take down the rest of us, then let them fail.

There. One simple easy regulation and we’re done with this topic.

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