Feb 17, 2009

Bethany McLean on the futility of financial regulation

A couple of years ago, if people were to point at who was going to bring down this system they would have chosen hedge funds. Lightly regulated vehicles, who knows how they're operating, they're going to be the cause of the next financial collapse. Lo and behold, hedge funds, for whatever problems they have, have actually not been in the center of this. They're one of the few groups not in Washington asking for a bailout. Citigroup, one of the world's most heavily regulated institutions, is. So that to me is the perfect example of why regulation is not a cure-all. (10:45 of interview)

Real transparency would be a great step forward, but I am always a skeptic about the ability of new regulation to really address problems. You look in the wake of Enron: Congress passed Sarbanes-Oxley which was supposed to fix all of the problems in the marketplace. And lo and behold, what happened this time around had absolutely nothing to do with Sarbanes-Oxley. It was irrelevant to the current crisis. (7:45 of interview)

~ Bethany McLean, Interview on PBS NOW, January 31, 2009

No comments: