If you have seen the movie “Annapolis”, you will know what I am talking about when I say someone is someone else’s “Mississippi”. Well, the latest reasons for the financial rescue package are a congressman’s “Mississippi”. By saying the financial industry needs more regulation congress has taken the heat off of themselves and placed it on the financial services industry. There is always a need to have good oversight and indeed there are some areas that need improvement, but recent regulations have not necessarily done that. Plus it has often been done at an extraordinarily high cost to the individual financial institutions. Take Sarbannes-Oxley as an example. This has in many cases duplicated the supervision on affected financial institutions and in the case of the valuation of assets has actually exacerbated the problems dealing with mortgage-backed securities. Also, the Community Reinvestment Act has good intentions, but when coupled with the political ambitions of some of our members of legislature, it gives “affordable housing” a new meaning.
There is no doubt the industry needs to control the actions of the persons involved where there are cases of outright fraud, but to use a shotgun approach to this problem and merely propose additional regulation is out of bounds.
Phill Rowley