Banks are not like ordinary enterprises, and their differences increase as they get larger. This makes public policy regarding banks more complicated than is the case in other areas of economic regulation.
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In efficient markets the mistakes of individual participants are corrected by the aggregate performance of the market as a whole. But when companies become so large that their mistakes spill out into the pubic arena, requiring some kind of public intervention to repair or salvage the situation, the pubic has an interest in reducing the…
There are many reasons to oppose introducing or increasing regulation, reasons that, depending on the context, are sometimes good or sometimes bad. Among the good reasons might be that - new regulation is purely punitive, - it has been hastily crafted with little understanding of the business that is to be regulated, - regulation is…
Regulation is necessary to ensure that companies, pressured by the contraints of competition and the need to generate profits, take the precautions necessary to ensure public safety. The recent revelations about decisions made by BP before the gas blowout in the Gulf are once again a demonstration that strong, sophisticated and effective regulation must accompany…
Graphic examples of market externalities are to be found all around us.
Congress has made much more progress on financial reform than cynics might have thought. The House and Senate bills have now been passed with strong majorities and will now be reconciled in what will surely be a bruising conference committee. The conference will proceed from June 15 and Congressional leaders hope to present the final…
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