Regulation and Amnesia
02/09/2010 - 05:16
James Besser
Wednesday, December 17th, 2008 James Besser in Washington Isn’t it interesting how Democrats and Republicans alike have turned “regulation” into the foulest of political expletives – but as soon as things go bad, complain that the regulators weren’t on the job? First it was the economy; as banks and finance institutions crumbled under the housing and subprime credit crises, there was a bipartisan chorus wailing about the failure of regulators to catch these problems before they touched off a worldwide economic meltdown. But wait; weren’t  many of the singers the same folks who worked for decades to loosen regulation in order for free markets to work their magic? Well, the magic has worked, and now everybody is wondering why the regulators were asleep at the wheel. Weren’t they supposed to protect us from…what, the same freewheeling markets that once dazzled us with high returns? Now its the sordid Bernard Madoff affair, which is hitting banks around the world hard and  clobbering a Jewish communal infrastructure that was heavily, if not always intentionally,  invested in his Ponzi scheme. When his “fund” was going great guns, investors would have been outraged at any hint government regulators wanted to slam on the brakes or even just slow the high-return juggernaut. But now that $50 billion in investments has apparently just disappeared, everybody’s complaining that government regulators should have been more diligent in protecting us from Bernie — and apparently from our own faulty judgment. It would be nice if these events settled once and for all the endless debate over regulation and produced a consensus that while free-enterprise capitalism works splendidly to create wealth, we also need diligent, sometimes stern and intrusive regulators to stem the inevitable tendency for things to spin out of control. But history suggests otherwise; chances are, when the economy recovers from the recession and Madoff is but a distant bad memory, “deregulation” will once again become a mantra as everybody with a few bucks to invest jumps aboard the amnesia-inducing roller coaster.

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