John Stossel is ABC News' Co-Anchor of "20/20" and New York Times best-selling author of Give Me A Break & Myths, Lies and Downright Stupidity. His "Give Me a Break" commentaries take a skeptical look at a wide array of issues, such as education, the economy, parenting, and more.
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Volcker & Hedge Funds
06/16/2009 2:39 PM
At my Princeton Reunion a few weeks ago, I participated in a panel called Wall Street, K Street, and the New Regulatory Era. Of course the panel turned out to be: 4 lawyers plus me. All the lawyers explained why my pro-free market argument was naïve. The lawyer to my right, Beth Wilkinson, not just a Washington lawyer, but the wife of Meet the Press host David Gregory, even personalized her argument by saying “John” while trashing the deregulation I championed.
It was all in good fun, however, and today it was more fun to discover that a few days later, one member of the audience, former Federal Reserve Chairman Paul Volcker, talking about hedge funds and private equity funds, said: “I do not believe they need to be so closely supervised and regulated as depository institutions. A presumption of government protection and support for financial institutions outside the “safety net” should be avoided.”
I’d also like to remind the eager-to-regulate crowd that when the market tanked, the highly regulated banks suffered most. When their market capitalization was down about 50%, I remember that the unregulated hedge funds were only down about 18%. So why is regulation always the “solution?”
June 16, 2009 in Economics | Permalink | Share | User Comments (5)
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I hope it was "all in good fun", John. I'd sure hate to go up against four lawyers in a debate.
Posted by: macsnafu | Jun 17, 2009 3:54:10 PM
I hope you expand upon this in the future.
Posted by: Jason | Jun 17, 2009 6:26:44 PM
Hmmm... 4 lawyers want more regulation? Shocking ;)
Posted by: Sean W. Malone | Jun 17, 2009 11:31:40 PM
Given the performance of regulations and regulators leading up to our current economic predicament, it seems to me that the naive ones are those who believe that more government regulation is the solution.
Posted by: Mike Mansur | Jun 18, 2009 4:58:01 PM
"So why is regulation always the “solution?”
I think Mike hit it on the head... I would add that when government regulations causes problems, the government does a CYA of blame shifting it onto others and saying more regulations are the solution.
It also seems to be the government's way of pretending that they are protecting the taxpayer instead of acknowledging that regulations raise the cost of living for everyone. (eg: business passes the cost off in higher service/product costs and lower wages...)
Posted by: Ordinary Sadie | Jun 21, 2009 3:21:22 PM
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