Nicole Gelinas writes in Investor’s Business Daily The Four Lessons Of Dodd-Frank We Need To Learn 3/26/12.
Regulators should require financial firms — banks or not — to hold a consistent amount of capital behind their investments. It’s not regulators’ job to decide which financial firms should be safe and which ones dangerous, nor is it their job to decide which investments are safe and which ones are dangerous.
A regulator’s job is only to make sure that the economy has an adequate cushion of capital to absorb inevitable financial-industry failures. That’s the lesson of the past five years — but the president has not heeded it.
Companies can adapt just fine to laws good and bad, but they need to know what each law is. Dodd-Frank just told regulators to write tens of thousands of new rules — and they’re working on it.
Gelinas wrote After the Fall: Saving Capitalism from Wall Street- and Washington, one of the earlier analytical pieces on the financial collapse. There are excerpts from it in this blog you can find with the search feature. Like the Sarbanes Oxley regulations written in the wake of Enron, which did nothing about the next crisis, adding layers of uncertainty and complexity creates more problems than it solves, and only paves the way for the next crisis.