Is There Ever Enough Regulation?

In the Wall Street Journal last week (12/24/14, Page A15, Good Medicine for Bad Bankers) Alan Blinder laid out his plans for more government regulation of banks. While seeking more regulation is not unexpected coming from a liberal like Blinder, it is the increased intrusion and non-stop zeal that is so frightening. 

Most conservatives understand that companies and their employees can be dishonest and will break legal and ethical standards. Conservatives understand that free markets don't solve all our problems. While most of us could debate until the cows come in just how much regulation and government spending is warranted or beneficial -- most of us would settle on something well north of zero. We get it Mr. Blinder. 

But at what point is enough enough? At what point do we ease into the Nanny State? Let's get back to banking. DF goes a long way to regulate banks. Some of us think it goes too far in some ways but we understand that banking is complicated these days and it doesn't hurt for government to put some curbs or brakes on riskier banking activities. After all, if government is going to subsidize or insure some bank deposits backed up by our tax money, then it makes sense that society should have some say so about banks. DF has a lot of say so. DF went through Congress and was signed by the president. There are also international accords that regulate bank risk exposure. 

Some might think that enforcing criminal statutes and DF would be enough -- at least for a while. But not so for Blinder. He wants to muck things up even more. His article quotes a Fed Official William Dudley as saying that there are just too many bad bankers these days. They do some really awful things apparently and are not being harassed enough by people in government who apparently never do anything wrong and are much better at banking than are the bankers. So what does Blinder recommend.

First, he wants whistle blowers to be encouraged and treated more kindly by their companies. Perhaps they should post photos of the "whistle blower of the month" on the company's Facebook Page. Then we can count all the Likes they receive. The ones with the most Likes get free tickets to an IU football game. Second he wants to regulate the pay of bankers so that they focus less on the short-run. 

Everyone loves to get paid for today's work when hell freezes over. Right?  Third, anyone caught doing something wrong would be not only convicted but would be barred from banking for life. I wonder how the unions would go for that one? Fourth, each bank would have a point total score -- sort of like airline frequent flyers points. These totals would accrue each time a bank was caught doing a no-no and would somehow be published so that all of us dummies would know exactly which banks were repeat offenders. Maybe a weekly tweet of bad bank scores would get the word out. Finally, when a bank was fined or otherwise punished -- it would not be enough to whip the CEO in public. Instead the government would require everyone in the offending part of the bank to be spanked in the town center by the principal. 

So Mr. Blinder. ARE YOU KIDDING? Why not do these same things to Pharmaceutical companies? How about all those companies who advertise great deals buying gold today? Then there are those wonderful firms who heavily advertise reverse-mortgages? Why stop there? I am sure there are evil and mean-spirited owners, managers, and employees in EVERY INDUSTRY who stay up all night conjuring up ways to deceive the public. 

This is nuts for a couple of reasons. First, we spent a lot of time and energy passing legislation over the last 50 years -- are you kidding about these suggestions? Did you copy this crap from one of your student's freshman exams? Second, are you sure you want our government to have regulators who tell business people how to run their companies? Do you want them to institutionalize whistle-blowers? Do you want to regulate pay? Do you  want to have government employees infringing on the rights of union employees to keep their jobs? Do you really want a government that often has strong ideological goals deciding which companies are the bad guys? 

Some of you are saying cool. You love the idea of government controlling these bad actors. To you I say -- just wait until the government thinks your company is one of the bad guys. Or maybe just take a peak at Cuba or China and see what it's like when liberals get their wish.