Over-regulated America

[RandomGuy]

Sorry, you are going to have to click on the topic to read the OP, 'cause I put the articles from the Economist in quotes. So there.

Both parties share blame in this. Special interest lobbying and partisan bickering and hackery is costing us. Shocker.

As a Democrat, I can admit the foibles of my party, act to moderate them, and speak out when I see stupid shit going down. This is one of those.

Sadly, I and others like me don't seem to have counterparts in the GOP, who has actively worked to expel people who might fit the bill.

I will flesh out this OP with a few good quotes. All three articles merit reading.

The home of laissez-faire is being suffocated by excessive and badly written regulation (http://www.economist.com/node/21547789)

The Dodd-Frank act: Too big not to fail (http://www.economist.com/node/21547784)

Measuring the impact of regulation ... Rule-making is being made to look more beneficial under Barack Obama (http://www.economist.com/node/21547772)

[boutons_deux]

Bill Black: “The only winning move is not to play”—the insanity of the regulatory race to the bottom

The JOBS Act is insane on many levels. It creates an extraordinarily criminogenic environment in which securities fraud will become even more out of control. One of the forms of insanity is the belief that one can “win” a regulatory “race to the bottom.” The only winning move is not to play in a regulatory race to the bottom. The primary rationale for the JOBS Act is the claim that we must win a regulatory race to the bottom with the City of London by adopting even weaker protections for investors from securities fraud than does the United Kingdom (UK).

The second form of insanity is that the JOBS Act is being adopted without any consideration of the findings of the Financial Crisis Inquiry Commission (FCIC), the national commission to investigate the causes of the current crisis. I am not aware of any proponent or opponent of the JOBS Act (other than me) who has cited the findings of FCIC. Everyone involved has ignored the detailed finding of a huge investigative effort. The FCIC report explained repeatedly how the three “de’s” (deregulation, desupervision, and de facto decriminalization) had produced the criminogenic environment that drove the financial crisis. The FCIC report specifically condemned the “regulatory arbitrage” that the worst actors exploited by choosing to be (not very) regulated by the “winners” of the regulatory race to the bottom. The FCIC report shows repeatedly how damaging the anti-regulatory fervor in general and the race to the bottom in particular proved.

The third form of insanity is that the JOBS Act was framed without any input from anti-fraud experts. Anti-fraud experts uniformly condemned the bill. We have ignored the experts.

The fourth form of insanity is that we have ignored the people who got past crises correct. The people who were the first to identify prior crises, who designed and implemented successful means to limit the crises, who prevented problems through effective supervision from becoming crises, and who held the most elite fraudulent CEOs culpable for their frauds have all been excluded from the drafting of the JOBS Act.

The fifth form of insanity is that the people who got everything wrong by designing the anti-regulatory policies that drove our prior crises have designed the JOBS Act. We are reinforcing failure and turning our back on what we know succeeds.

The sixth form of insanity is a counterfactual. The unique aspect about this crisis is that it is the first one in modern U.S. history in which the CEOs directing the control frauds that caused the crisis have done so with complete impunity from the criminal laws and near impunity from civil suits and enforcement actions. The worst, most destructive fraudulent CEOs have been allowed to become and remain wealthy through their frauds even though several of them caused greater losses than the entire S&L debacle. The worst fraudulent CEOs who led the prior epidemics of accounting control fraud that drove the S&L debacle and the Enron-era crisis were prosecuted. Not a single elite CEO from Wall Street or the largest fraudulent lenders has even been charged with fraud arising from such loans even though they, collectively, made over two million fraudulent loans in 2006. Had the Bush and Obama administrations prosecuted and denounced these elite frauds it would have been politically impossible for an act as criminogenic and cynical as the JOBS Act to be promoted by the Obama administration and adopted by large Congressional minorities. We are seeing with the JOBS Act the sick face of crony capitalism.

The seventh form of insanity is that there is no greater killer of jobs than elite financial fraud. Such fraud epidemics can hyper-inflate bubbles (as they did in the U.S. and several European nations) and cause severe financial crises and recessions. The resulting Great Recession has cost over 10 million Americans their existing or future jobs in this crisis. It has cost over another 15 million people their existing or future jobs in Europe. The JOBS Act is so fraud friendly that it will harm capital formation and produce additional job losses. It may appear to be an oxymoron designed by regular morons, but that underestimates the abilities of the lobbyists that drafted this bill. They are not morons. They are doing faithful, clever service to their fraudulent clients. That makes them more dangerous.

The eighth form of insanity is that all of this is occurring weeks after the death of James Q. Wilson, a prominent political scientist who became most famous for co-developing a criminological theory – “broken windows.” The theory held that it was essential to elevate conduct in the public sphere by reorienting enforcement priorities to emphasize seemingly minor crimes and civil wrongs (e.g., cracking down on squeegee men). Wilson and “broken windows” are near universal favorites of conservatives. Wilson’s theories are controversial among criminologists in the blue collar sphere, but they are broadly accepted in the white-collar sphere. The JOBS Act, however, totally repudiates any “broken windows” approach to minimizing elite white-collar crimes. It encourages the kind of fraud-friendly conduct that has always proven severely criminogenic. Conservatives are the strongest supporters of the JOBS Act, which allegorically hands out buckets of rocks to the bottom feeders of the world of securities and encourages them to break every window in sight. Conservatives apply policies designed to prevent and repair immediately “broken windows” only to poor criminals, not the fraudulent CEOs who caused vastly greater financial losses that brought the global economy to its knees.

The ninth form of insanity is that the JOBS Act is being adopted at the same time that the Federal Reserve Bank of Dallas – the most anti-regulatory bank in the entire Federal Reserve system (which is a very large statement) warned in its recently released annual report that the largest U.S. banks drove the ongoing crisis and posed “a clear and present danger to the U.S. economy.”

The Dallas Fed used to object vociferously to all financial regulation because it claimed that markets were “self-correcting” absent regulation. It now warns that market “incentives often turn perverse, and self-interest can turn malevolent. That’s what happened in the years before the financial crisis.” Only effective regulatory “cops on the beat” can prevent frauds from creating a perverse “Gresham’s dynamic” (when frauds prosper, market forces become perverse and bad ethics drives good ethics out of the marketplace).

http://www.nakedcapitalism.com/2012/03/the-only-winning-move-is-not-to-play-the-insanity-of-the-regulatory-race-to-the-bottom.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29&utm_content=Google+Reader

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eg, small companies aren't bitching about regulations, they bitch about lack of business.

D-F has effectively been gutted by the financial sector. where regs haven't been killed, they are so full of loopholes as to be meaningless.

America's problem isn't regulations. The primary problem is an unregulated, corrupt, vampire squid of a financial sector, and VRWC outfits like ALEC working hard, and mostly secretly, for decades to steal tax payer funds through "privatization".

[RandomGuy]

America's problem isn't regulations. The primary problem is an unregulated, corrupt, vampire squid of a financial sector, and VRWC outfits like ALEC working hard, and mostly secretly, for decades to steal tax payer funds through "privatization".

If by that you mean lobbyists.... I think most would agree.

Hell I'm surprised the usual suspects aren't all over this.

[RandomGuy]

Dodd-Frank is part of a wider trend. Governments of both parties keep adding stacks of rules, few of which are ever rescinded. Republicans write rules to thwart terrorists, which make flying in America an ordeal and prompt legions of brainy migrants to move to Canada instead. Democrats write rules to expand the welfare state. Barack Obama’s health-care reform of 2010 had many virtues, especially its attempt to make health insurance universal. But it does little to reduce the system’s staggering and increasing complexity. Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis.

[RandomGuy]

Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future). Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.

The other force that makes American laws complex is lobbying. The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress’s last, failed attempt to regulate greenhouse gases was even worse.

Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America’s share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is

[RandomGuy]

America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

[RandomGuy]

America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

[RandomGuy]

Would this hand too much power to unelected bureaucrats? Not if they are made more accountable. Unreasonable judgments should be subject to swift appeal. Regulators who make bad decisions should be easily sackable. None of this will resolve the inevitable difficulties of regulating a complex modern society. But it would mitigate a real danger: that regulation may crush the life out of America’s economy.


Funny thing is that this didn't come from Fox News. That is why you don't see the usual suspects posting it. Damn liberals at the Economist... HA!

[TeyshaBlue]

America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

Man, this bbs has been acting flaky today.:lol

Anyway, is this not somewhat similar to the recent proposals to regulate the FCC ? I say "somewhat" because the targets are certainly different, but the methodology sounds familiar.

[RandomGuy]

Man, this bbs has been acting flaky today.:lol

Anyway, is this not somewhat similar to the recent proposals to regulate the FCC ? I say "somewhat" because the targets are certainly different, but the methodology sounds familiar.

Dunno, haven't been keeping tabs on it.

I think rather telling is that the common theme to all of this is the way lobbists of one stripe or another tuck stuff into big bills.

The problem with the approach the Economist favors is that regulations driven mostly by regulators would be subject to the same pressures as the laws themselves. They would also be subject to the whims of the executive branch changing hands, or a Congress that decides to use the power of the purse to force changes.

No easy way out, I'm afraid.

I would favor such an approach, simply to try SOMETHING different. I don't think the current system is working all that well.

[boutons_deux]

"current system is working all that well"

For the 1%, it's working great, they paid for it.

For the 99%, it mean the "extractive" and polluting/distrucive 1% will continue unhindered.

[GSH]

Both parties share blame in this. Special interest lobbying and partisan bickering and hackery is costing us. Shocker.

As a Democrat, I can admit the foibles of my party, act to moderate them, and speak out when I see stupid shit going down. This is one of those.

Sadly, I and others like me don't seem to have counterparts in the GOP, who has actively worked to expel people who might fit the bill.



There's a saying that "the most effective cure for the common cold is hemlock". In other words (obviously) if you're dead, you won't be suffering from the cold.

There are a lot of attempts at regulation that, on the surface, are probably a good idea. The problems come when you actually read what they are proposing. In a lot of cases, the supposed "regulations" wind up doing the opposite of what they are supposed to do. (Protect the Wall Street corrupt practices, drug companies, etc.) And most, if not all of them these days, include a bunch of other crap that is tangential, or totally unrelated to the actual bill or regulation.

Once again, when someone speaks out against the bills/regulations, there is immediate push back from people saying "you want to protect the Wall Street fat cats" or "you want poor people to die in the streets". And I sit there thinking, "What? Because I don't want to drink hemlock?"

Ask yourself why the Affordable Healthcare Act had the provision allowing the government to take over the student loan program. Or why it front-loaded the benefits, and back-loaded much of the expenses until after the current administration is gone? And if it really wants to cut medical costs, why didn't it address problems with drug companies, and tort reform? A lot of people would have accepted a healthcare bill that wasn't put together like this one.

The idea that a group of people all hate women, want dirty water, and wish for poor people to die horrible deaths is ridiculous. And yet a bunch of media moonbats say things like that every day.

[RandomGuy]

The idea that a group of people all hate women, want dirty water, and wish for poor people to die horrible deaths is ridiculous. And yet a bunch of media moonbats say things like that every day.


http://s3.credoaction.com.s3.amazonaws.com/comics/wp-content/uploads/2011/09/TMW2011-09-07colorlowres.jpg

[boutons_deux]

"provision allowing the government to take over the student loan program"

because the govt was giving loans directly to the students for decades,then dubya privatized it by handing to the banks which was nothing but a license to print money. then the govt made it illegal for a student to escape paying back school loans with bankruptcy (no matter how broke they were).

Notice that if a Corporate_American goes bankrupt, it can escape 100% payment but if a student Human-American goes bankrupt, they're stuck with college loans til death.

"group of people all hate women"

the repugs and conservatives are misogynists, just look at the actions catalogued by Frank Rich in another post in another thread


"want dirty water'

they don't specifically WANT dirty water, they want increased profits, and don't want to spend any profits conforming to clean water rules.

"wish for poor people to die horrible deaths is ridiculous"

they don't want people to die horrible deaths, they just don't want to pay taxes that would cover poor, old people medical care, and they really don't GAF if those people die or not.

[GSH]

Whoa - you can't just change horses like that. You were talking about yourself, and people from the other side. Now you want to deflect with a cartoon about politicians? You know how I feel about politicians - from both sides. I promise you, everything you say about a Republican politician, I can counter with something about a Democrat politician. And vice-versa, I know. It's a fruitless exercise.

All I said was that just because we may be against a piece of legislation, or regulation (as per the OP), it doesn't have to mean that we don't want ANY regulation. Most of the bills and regs for Wall Street are a joke. Political theater that do nothing to keep the parasites from sucking the life out of everyone in the country, either directly or indirectly. Give me a law that expressly eliminates short-selling, for example. Give me one that prevents the banks from participating in arbitrage on the money they get from the Fed. Don't give me these bullshit regs that accomplish nothing, and then do a campaign ad saying, "Look at all we've done."

I don't want to drink the hemlock, and the "other side" insists it's because I like having a cold.

And BTW, Random. You can make an argument on your own that's better than some damned cartoon.

[GSH]

One more thing, Random. I hate Rush Limbaugh. I listen to him occasionally, to hear what topics he's pimping. But even on those occasions where I find myself agreeing with something he says, I have this self-loathing for agreeing with anything he says.

Once again, the idea that anyone with a Republican/conservitave outlook cannot think for himself/herself, and must get direction from some damn radio talkshow host? It's another one of those short-cuts to dismissing a whole class of people, and avoiding any dissenting thought.

[GSH]

"provision allowing the government to take over the student loan program"

because the govt was giving loans directly to the students for decades,then dubya privatized it by handing to the banks which was nothing but a license to print money. then the govt made it illegal for a student to escape paying back school loans with bankruptcy (no matter how broke they were).

Notice that if a Corporate_American goes bankrupt, it can escape 100% payment but if a student Human-American goes bankrupt, they're stuck with college loans til death.

Is that what this is all about, Beaver? The ability to get out of paying back student loans? Of course it is. And THAT is why Obama stuck that piece of crap into a bill where it didn't belong. So he could lure young voters with the promise of getting out of their agreement to pay back money.

"group of people all hate women"

the repugs and conservatives are misogynists, just look at the actions catalogued by Frank Rich in another post in another theread"

Frank Rich = All Republicans. Brilliant sweeping generality. Your student loans should obviously be forgiven, because you didn't even learn the basics.


"want dirty water'

they don't specifically WANT dirty water, they want increased profits, and don't want to spend any profits paying conforming to clean water rules.

Really? I did a long consulting gig with DuPont. They spend an unbelievable amount of time and money conforming to clean water rules. Weak-assed generalities won't get you anywhere. I think what you mean is that they have the audacity to push back, and not to blindly want to do everything that someone orders them to do. Would you agree to do that?

"wish for poor people to die horrible deaths is ridiculous"

they don't want people to die horrible deaths, they just don't want to pay taxes that would cover poor, old people medical care, and they really don't GAF if those people die or not.

Have you ever checked the percentage of incomes given to charity for Democrats vs Republicans? That's a pretty stupid statement. As usual.





I would bet that even some of your friends here might say that stuffing a student loan takeover into a healthcare bill seems like a wrong thing to do. And I bet if they knew me (or a bunch of other Republicans) in real life, without knowing what party I vote for, they would never suggest that I am a misogynist, or that I don't want to take care of the environment. Your kind of thinking, and the constant hate you carry, are a cancer. And I don't mean a benign tumor.

I happen to believe that if you borrow money, you pay it back. And that the bankruptcy system in this country has been perverted beyond belief. I find it curious that human embryos aren't given the same status under the law as animal embryos. (Pick one way or the other, at least.) And I don't think that the politicians of either party are very representative of the average citizens that vote for them. I'm sure that when the re-education camps open, you'll come looking for me first.