Better regulation of the financial sector is clearly needed, but the headlong rush to tighten rules is more likely to create problems, argues Philip McBride Johnson. The usual result is overlapping jurisidictions and over-complex rules, ripe for gaming.
The G20 Summit, held in London on April 2, marked our leaders’ belated recognition that “the bigger they are, the harder they fall” and that our vast financial infrastructure needed closer supervision all along, precisely for that reason.
Unfortunately, they also came up with a new and misguided international policy on financial regulation: simply that there cannot be too much of it.
A ‘the more the merrier’ approach to regulation is not only inefficient, but can have a seamier side, as experience shows.
Earlier in this decade some energy companies engaged in trading and price reporting practices that drew the attention of the US Congress and regulators.