That's kind of our point. No amount of regulations, is going to solve anything. In fact, regulations generally make the problem worse, which you pointed out.
Regulations inherently make the companies they are created to supposedly reign in... larger and more out of control.
Allow me to explain....
Regulations are very expensive, and at the same time, they reduce the ability of the companies to create new products.
So I'm a big mega-bank. You are a smaller bank. Between the two of us, which one has the money to spend in order to meet the regulations? I do. I have hundreds of billions. You are a small bank chain, and likely don't have billions to spend meeting regulations.
Additionally, between the two of us, which one needs to create diverse new products to attract customers? You do. I do not. I'm a mega bank. Customers will come to me on name brand alone. You are the one who has to attract customers with new products.
The regulations will both harm your ability to create new products, and will cost you tons of money you don't have in order to be compliant.
So you facing these huge costs and challenges, may just determine to sell out to me. You sell off to me, and I become larger and more profitable, because now there is less competition.
And you can see this throughout the entire economy. In states that have the tightest regulations, you often see the fewest insurance companies, for example.
When they passed the net neutrality regulations, the first thing that happened was a wave of mergers across the country. Comcast today is vastly larger than they were before those regulations passed.
Indeed, every time there is a wave of regulations, what follows is a decline in public choices as companies sell out and merge. Go look at the auto industry before the regulations of the 1970s. There were many separate companies. By the 1990s, it was just GM, Ford and Chrysler.
The solution to having these massive banks, is actually to deregulate, and allow more free competition. Competitors will rise up where the large banks fail, and the market will end up more diverse.
Bull. Without regulations and oversite Trump would still be stealing from his charity.
A competitor can't rise up to compete with Goldman Sachs. Impossible.
Right now it's impossible.... because all the regulations make it impossible.
No, regulations does not prevent stealing from a charity. AOC was using campaign money, funneled through a front company, to her boyfriend. Why didn't the regulations prevent that?
Franklin Raines was cooking the books at Fannie Mae, and fabricated a profit where there was none, so that they could trigger executive bonuses.
Enron, Bernie Madoff... the list of examples where people engaged in fraud and money laundering while under heavy regulation is endless.
Nothing can somehow "prevent" crime. What you can do is have laws against fraud.... and then punish people caught engaging in fraud.
I'm all in favor of more law enforcement. 100% support more law enforcement.
However, regulations do not prevent crime. All they do, is allow the rich to hold down the poor. That's it. No regulation anywhere has ever stopped a crime.
No regulations do not stop corruption. There wi always be people who think they can get by with it.
Regulations allow the oversite that catches the corruption.
I disagree with that too. If the oversight worked..... again.... Fannie Mae, Freddie Mac, Enron, AOC, Madoff.
You know who caught Madoff? Outside investors who kept looking at the returns, and saying it isn't possible. Enron, you know who caught Enron? No one, they went bankrupt.
In fact, from what I've read elsewhere, Enron was particularly damning, because Enron used the regulations to their benefit, to conceal the fraud. When the executives met with bond holders, who said to Jeff Skilling that it appeared Enron was hiding something, Skillings reply was that they had filed with the SEC and followed all the regulations. As a result the fraud was concealed, and the bond holders accepted that.
So I see little evidence that oversight does anything. When evidence of fraud comes up, they investigate, just like they would investigate any fraud, without any regulations, or any oversight.
I'm not against oversight so much..... I just think law enforcement does a better job of oversight, than the supposed oversight agencies.
But regardless, I still see the regulations do far more harm than good. I see little that they stop any crime from happening, and a ton that it holds the poor down, so the rich and stay above.
Yes, regulators were tipped off and ignored all warnings. I don't disagree with that. There should have been a mass firing. They did not do their job.
I argue all the time that laws and regulations not enforced really are worthless. About like our current laws concerning the hiring of illegals.
It's not something we should accept. To note though, without them Maddoff is a free man.
Bull. I disagree. Bernie Madoff was engaged in fraud. Fraud is illegal. Fraud is not a regulation. Fraud is a violation of law. You can not tell people that you are going to use their money to purchase assets on their behalf, and then use it to pay previous investor, not buying any assets. You cannot tell people you are paying them dividends from their investments, when there are no investments, and you are paying them from new investors.
You would not need a single regulation anywhere on the planet, to determine Bernie was engaged in Fraud, and prosecute him on that Fraud, and toss his con-man butt in jail for life.
Yes, regulators were tipped off and ignored all warnings.
Which leads to another problem. You touched on a completely different issue, and extremely valid.
I would still suggest that whether regulations are enforced or not, they only have negative consequences. Regulations are used by the big companies, to shut out the little companies. Additionally, regulations are used by the wealthy, to oppress the poor.
The rich have the ability to pay the cost of regulations. Small competitors do not. Regulations shut out the small companies, to enrich the large ones.
Regulations make the rich richer, and the poor poorer.
The rich also have the ability to influence government regulations, where the poor do not. Whether they rent the Lincoln bedroom from Bill Clinton, or they pay $32,000 for a private dinner with Obama, or any of the millions of other ways... they can easily slip in specific regulations or exemptions that benefit them.
Do you have any idea just how much regulations we have on banks?
Consumer Financial Protection Bureau (CFPB) Bank Regulations
Federal Deposit Insurance Corporation (FDIC) Banking Regulations
Federal Emergency Management Agency (FEMA) Banking Regulations
Federal Financial Institutions Examination Council (FFIEC) Banking Regulations
Federal Reserve Board (FRB) Banking Regulations
Federal Trade Commission (FTC) Banking Regulations
National Credit Union Administration Banking Regulations
Office of the Comptroller of the Currency (OCC) Banking Regulations
Department of Justice (DOJ) Banking Regulations
US Department of the Treasury Banking Regulations
Those are JUST the Federal level regulatory agencies.
Lawriter - ORC - Title [11] XI FINANCIAL INSTITUTIONS
This is the Ohio code regarding banks.
You'll notice the last one is:
DIVISION OF FINANCIAL INSTITUTIONS
Which is part of the Ohio Department of Commerce, which has their own regulations on banks.
Let us even simplify this.... Let us look at just one single bank law. Dodd-Frank.
This bill was over 850 pages long. This bill also amended the following existing acts:
Commodity Exchange Act
Consumer Credit Protection Act
Federal Deposit Insurance Act
Federal Deposit Insurance Corporation Improvement Act of 1991
Federal Reserve Act
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
International Banking Act of 1978
Protecting Tenants at Foreclosure Act
Revised Statutes of the United States
Securities Exchange Act of 1934
Truth in Lending Act
The "summery" page of this act, is 40 pages long. This bill went through
9 different committees, each I'm sure with their own lobbying efforts.
House Agriculture 12/02/2009 Referred to
House Financial Services 12/02/2009 Referred to
House Energy and Commerce 12/02/2009 Referred to
House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection 12/03/2009 Referred to
House Judiciary 12/02/2009 Referred to
House Rules 12/02/2009 Referred to
House Budget 12/02/2009 Referred to
House Oversight and Government Reform 12/02/2009 Referred to
House Ways and Means 12/02/2009 Referred to
Senate Banking, Housing, and Urban Affairs
Look at all the committees, one banking law had to go through, each adding their own special interest regulations.
And what is in all those thousands of pages? Exemptions. What did you think was in all those regulations?
Takes you five seconds to do a search for the word "exempt", and find hundreds of examples throughout the legislation.
Exemptions.--If the Board of Governors determines that
an exemption from the requirement under paragraph (1) is
appropriate, the Board of Governors may exempt a company, or any
transaction or transactions engaged in by such company, from the
requirements of paragraph (1).
Hmmm.... board of governors can just issue an exemption at will? And who do you think carries enough influence to make that happen? The small startup bank, or the massive mega bank, that just spent $32,000 to have dinner with Obama?
You tell me.
That is one of thousands of exemptions. THOUSANDS. And don't play this game, that this is just Dodd-Frank.... I can pull up any banking regulation you want, and find exemptions all over the place, as each bill goes through a half dozen committees.
And let's talk about the regulators themselves.
In this video, at 3:21, Rep Shays points out that most of the people in the very hearing on oversight, were all getting paid by Fannie Mae and Freddie Mac. Now we're not even talking about private banks somewhere.... we're talking about banks directly run and operated by the government. The CEO of Frannie Mae was Franklin Raines, who was appointed by Clinton as Director of the Office of Budget and Management.
And let's talk more generally about oversight.... All oversight is going to be manipulated by the people they have oversight over. That's normal. That's natural. And I would say that is unavoidable.
You might, ask, why would it be unavoidable? It's real simple.
Do you really know how banking works? No. I don't either. I know the fundamentals, but I couldn't run a bank. What do you think a bunch of appointed bureaucrats in Washington know about running a bank? Nothing. Take Franklin Raines. He was appointed to everything. The man never held a job in his life, that wasn't either in an Ivory tower, or in a tax payer funded position. It's not a surprise that Fannie Mae failed completely after his guidance.
Most people in government, couldn't operate a lemonade stand. So when you see Shays saying at 4:35 in the video above, that Fannie Mae had been manipulating OFHEO for years, my response is of course. These are politicians. They don't know anything. Even Franklin Raines says later in that video that these house mortgages are "risk-less", just a few years before Fannie Mae and Freddie Mac became the two most expensive bailouts of the entire sub-prime crash.
So when these know-nothing bureaucrats in charge of oversight, realize they have no idea what they are doing, who do you think they are going to go to for advice?...... the very people they are in charge of oversight over. After Deepwater Horizon, who did they talk to about what new 'safety regulations' they should create? Oil companies. When they were trying to come up with insurance regulations for ObamaCare, who did they talk to? Insurance companies. After the 2008 crash, who did they consult about Dodd-Frank? Banks.
And if you doubt that, then I have a challenge for you. Name one oversight agency that does not have people either on the committee from the companies they oversight, or does not have people now working in those companies, originally from the oversight agency.
You can't.
This is natural. This is normal. This is unavoidable. There will never be a time, where any oversight agency, is not influenced by the people they have oversight over.
Let me put it another way... If your wage in life, was controlled by a guy down the street who is on city counsel.... You would make it a point to meet that guy, and talk with him over lunch. We all would. I would, absolutely. That guy determines if I ever earn more money for the rest of my life? Yeah, I'm going to meet up with him.
The regulators have the ability to control millions, and billions of dollars that companies can earn. They are GOING to find a way to influence those regulators. And it doesn't matter what system you have. Socialist system, capitalist system, whatever system you have, if you have a group of people that control a hundred billion dollar industry, they are going to find a way to influence that group of people. Again, Fannie Mae was a government run company, influencing a government run oversight. Don't sit there and pretend that if only we were less Capitalist, things would be different. Not true.
My point again.... regulations solve nothing. Never have. Never will.