Less than a year ago, Treasury Secretary Henry M. Paulson, Jr. was giving a lot of support to efforts that were designed to loosen business regulation and Sarbanes-Oxley reforms. We had some thoughts on the subject at the time. Fresh from the top post at Goldman Sachs and on the job for only a few months, the Secretary noted:
A consequence of our regulatory structure is an ever-expanding rulebook in which multiple regulators impose rule upon rule upon rule. Unless we carefully consider the cost/benefit tradeoff implicit in these rules, there is a danger of creating a thicket of regulation that impedes competitiveness.
Today, Secretary Paulson called for a tightening of rules in a whole range of market areas and indicated that new regulations are on the way. Meltdowns in the housing market and downturns in the economy that get people thinking about the 1930s, and where weak oversight and unfettered risk creation were major contributors to the turmoil, have a tendency to do that. In his speech, Mr. Paulson observed:
We must have better policies, processes and mechanisms to understand and manage complexity, to discourage its excess, and to better understand and manage risk.
It’s amazing how different the world looks when the perspective shifts from what’s good for Wall Street to what’s needed on Main Street.