Banking

It was quite a few years ago when people first realized that genetic engineering was getting ahead of the law and steps were taken to try and control things like cloning and making designer babies. Then the Internet showed that free speech was getting ahead of the law and today we see that financial institutions are ahead of the law. When I say ahead of the law I don’t only mean that the laws governing these entities are obsolete, I mean that the lawmakers are not able to understand the complexities of these issues not to mention the politics.

We are now in the process of enacting new laws that will supposedly prevent future financial breakdowns like the one we just experienced with the mortgage crisis. The problem is that most lawmakers have little understanding of the new derivative type products that are available so how will they properly regulate what they do not understand. As an aside you might say that since they don’t read the bills it doesn’t matter but that is only one aspect of the problem. As Representative Conyers of Michigan said, what good does it do to read the bill if you don’t know what it says after you read it or as Speaker Pelosi said, we will find out what’s in the bill after it is passed.

The current bill to re regulate the financial industry is flawed in that it sets up a plan to deal with “to big to fail” banks instead of keeping them from becoming to big to fail. The Republican solution is to just let them fail but when Republican President Bush was faced with the crisis he chose bail out over fail out. The current bill needs to be changed to include transparency, transparency, transparency. If every transaction is open and public then the old saying of Judge Brandeis that sunshine is the best disinfectant will keep us on the straight and narrow.