New Rules

Many of you have likely seen Bill Maher’s feature New Rules on his HBO TV show or have read his books with the same title. It all takes off from the old comic theme, There Oughta Be a Law, which inspired one California state senator  to create a contest inviting his constituents to come up with ideas for bills to deal with problems the professional legislators have overlooked.

We’re likely to have a whole bunch of new rules to govern our financial system going forward. For those who complain, “There should have been a law,” well, look at it this way. It’s taken about a century for our motor vehicle laws to catch up to what they’re regulating. The rules usually follow the abuses.

To start with, how about the creation of a financial FDA, to which new instruments like credit default swaps could be submitted for study and testing before they’re deployed in the marketplace?

There are a number of institutions that were created following the Great Depression, like the FDIC and the Securities and Exchange Commission, which are still there helping us today. As serious as our current situation is, it would be a lot worse if we didn’t have these institutions protecting us from further harm.

Wild Wests always have to be tamed if progress is to be made. The challenge is finding a balance so that the new rules don’t stifle exuberance and innovation, but protect us all from damage. Sounds kind of like raising children.

Many of us would like government to go away, but there are times when government is needed, and it seems clear to me that this is one of them.

There, now I’ve said it.