Every once in a while, you see a public figure say something and think to yourself, “I am almost certain that a historian fifty or a hundred years from now is going to be using that quote to capture the spirit of this moment”.
So last week, during testimony before the House Financial Services Committee, there was this statement, quoted in the New York Times:
We got to the brink of a global financial meltdown that was demonstrably a result of the system that institutions, risk management executives and lawyers were “used to”. We’re still clinging to the edge of the abyss, in fact. But here we have the people whose practices got us all into that mess talking to the people who went ahead and allowed it to happen, and the resulting consensus seems to be a big thumb’s up to go ahead and do it again. So yeah, I have a sick, uneasy feeling that fifty years or a hundred years hence, that quote is going to be a great example of willful blindness to the icebergs dead ahead.
What I got from the article that you linked to was something entirely different, a determination on the part of regulators to make sure that we avoid the same mistakes. Of course the people that the regulations touch are going to be saying that they don’t need it. Such a statement is as unremarkable as someone in the petrochemical industry saying that clean air regulations are unnecessary.
It’s interesting. I just get the opposite impression: that guys like Yingling are in the driver’s seat, and that the regulators are more or less taking the back seat for the next round of Mr. Toad’s Wild Ride.
Yeah, they’re kind of in the driver’s seat because (to mix the metaphor) they’re the available engine of prosperity. If the gummint wants to do what it wants to do – health care reform, e.g. – it’s going to need business to be clicking along. But even when business knows there’s a problem, individual businesses can’t regulate themselves or risk competitive disadvantage, nor can business as a whole regulate itself because there’s no institutional mechanism for that and indeed no such coherent entity as ‘business as a whole’.
So government ends up being the default instrument of regulations that are simultaneously fought tooth-and-nail and tacitly understood by most everyone to be necessary. At which point there’s a new playing field and they all go back to figuring out how to game it. It’s not a system that produces linear outcomes, but how could it be with so many actors with so many agendas?