Thursday, September 24, 2009
Not exactly
In the Sep 28 New Yorker, James Surowiecki writes: "When Barack Obama went to Wall Street last week,to make the case for meaningful financial regulation, he took well deserved shots at some of the villains of the financial crisis ... But to that list he could have added the credit rating agencies." And "... we need a divorce: the rating agencies shouldn't be government-sanctioned and government-protected instiutions ..." And "... last summer the SEC seriously considered enacting a series of proposals that would have gone some way toward uncoupling the rating agencies from the regulatory system. The plan fizzled, however, thanks in part to pressure from a surpirisng source: big investors."In a fix like this, go to William of Ockham. The friar might have noted that the only true regulation is competition. Otherwise, we could be chasing our tails, as in the cited column.
I usually read Surowiecki in the New Yorker and enjoy him. But, like many other smart people, he continues to dream of enlightened regulators and is unable to square experience with the dream.
