Monday, October 6, 2008

To regulate or not to regulate

The financial crisis has created a lot of accusations about deregulation. I hear the word unbridled a lot. But lets review the facts. In 2004 and several time before that and after, the Republicans attempted to increase regulation on Fannie May and Freddie Mac and those regulations were defeated primarily by Democrats. In 2007 the democratic controlled congress saw that their support 30 year support of these monstrosities that were created by regulation was going to come around and hurt them so they ended up passing the similiar bills to what the republicans wanted in 2004. However, 2007 was too little too late.

The point here is regulation is neither good nor bad. It depends on the regulation. Republicans have been trying to get rid of bad regulation and bring in good regulation.


Philip said...
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Philip said...

I'm no economist, but I'm having trouble understanding why our current situation demands any new regulations. Businesses and individuals made irresponsible financial decisions. Many people are living in houses they can't afford. They should foreclose and buy a smaller house. And the banks should suffer the financial loss resulting from poor diagnosis of credit risks.

As it stands now, they will suffer, but not enough. Many will stay in houses hey can't afford, paid for in part by those who are living in houses they can afford. Those who have responsibly saved for a new house will find themselves less able to qualify for a mortgage now.

And the same republicans who preach fiscal responsibility and accountability advocated this. Not that the democrats were any better, but I've never expected fiscal responsibility from them. Now I don't expect it from any elected representative. They can't see past their next election.

There's a term in poker, "don't throw good money after bad". That's exactly what we're doing here.

Jason said...

You should change the ending to read "the point here is everything bad that ever happens can be looked at through the colored lenses of your favorite party and you can blame the other party"... :-)