Why Regulators Fail


	Why Regulators Fail

Victoria Barret

3-31-2008 7:20 PM

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tags:

banking system, regulation, government, housing crisis

Victoria Barret says:

Government agencies compete for market share, for self-preservation. The result is lax oversight and lots of holes in the system. Would a mega-regulator be better?

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://www.clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/f7533a75-0234-4fe7-be0f-1125d2233d01/24368F8C-DCE2-4F75-82B9-34A97484A999/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://online.wsj.com/article/SB120675834275673863.html?mod=hpp_us_pageone" href="http://online.wsj.com/article/SB120675834275673863.html?mod=hpp_us_pageone" style="font-size: 11px;">online.wsj.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article/SB120675834275673863.html?mod=hpp_us_pageone"><P class="times">"It's not a good idea to have people competing with each other, particularly if they're competing in laxity," says Hal S. Scott, professor of international financial systems at Harvard Law School.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article/SB120675834275673863.html?mod=hpp_us_pageone"><P class="times">One other problem: The regulatory system left important pockets largely unwatched, such as mortgage brokers who aren't part of regular banks. With narrowly focused agencies looking after discrete areas of the finance world, there were major lapses in coordination as financial market innovation outpaced regulators' ability to keep up.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article/SB120675834275673863.html?mod=hpp_us_pageone">"I just want you to know there's a federal bank regulator in Washington, D.C., who knows it too, and who wants to do everything possible to preserve the institution of community banking in this country." Each agency -- OTS, the Federal Deposit Insurance Corp. and the Comptroller of the Currency -- implied it would be more pleasant to deal with than the others on the stage.</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/24368F8C-DCE2-4F75-82B9-34A97484A999/blog/" title="blog or email this clip"><img src="http://content7.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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