[TaylorAlexander]

There is an argument to be made that we shouldn't allow the finance sector this much creativity. Banking has worked for hundreds of years, and most problems seem to be caused by new phenomena. It may be better to over regulate and then remove certain regulations only when the activities can be proven safe, rather than let everyone go crazy with our money and bankrupt millions of Americans every decade or so.

[AnimalMuppet]

Right. New financial products/services should be, essentially, "guilty until proven innocent". Regulations should be very tight in the beginning, and then slowly relaxed - say, over 50 years.

By way of analogy, if I create a new kind of medical device, the FDA does not say, "We don't have any regulations that cover that, so it's completely unregulated until we see the need to write some." No way.

But a new financial product, while it can't kill anyone, it can still cause massive damage. (We just got a case study in this in 2008.) The default for any new financial idea should be regulated, not unregulated.

And "but it's not a bank!" doesn't cut it. Mortgage securitization wasn't a bank activity, but it still nearly destroyed the world economy. Repo isn't a bank activity, either, but it played a significant role in the crash. Both are "bank-like" enough that they needed serious regulation. Since the risks were not yet understood, any regulation in place was not nearly stringent enough.

[cm2187]

How did repos play a role in the crash?

[randomname2]

This sounds like Paul Krugman's thesis that the run on the (unregulated) shadow banking system was at the "core of what happened" to cause the crisis and if only it was regulated, the crisis wouldn't have happened.

A great writeup about this by someone a bit more credible than Krugman can be found at http://blogs.wsj.com/economics/2010/02/23/so-what-exactly-ca...

Written by Yale and Wharton Professor Gary Gorton, who has held positions at the Bank Of England, the Federal Reserve and the FDIC.

[tsotha]

I am 100% sympathetic to that argument. Every time I hear someone bashing Sarbox because it "stifles innovation" I want to reach into my radio and slap the person who said it. I don't want "innovation" from my retirement fund. I want good stewardship of my money.

"Innovation" is almost always another way of saying "We found another way to gamble with the customer's money."

[mgalka]

The entire premise that the banks brought down the economy is complete BS. They just make an easy scapegoat.

The regulators, rating agencies, mortgage lenders, government, GSEs all contributed to people overleveraging, but thats not even the real issue.

The real problem is that the economy has changed, and all but the high skilled jobs are going overseas or being done by machines.

Bankers are not going to jail because they didn't break any laws. People need to stop being parrots and making claims about things they dont understand.

[tsotha]

Where did I say banks brought down the economy? Where did I say bankers should go to jail? Did you just see some words you can identify and decide to hang rant #47 on a reply to my comment?