After listening to Treasury Secretary Geithner spar with Congress yesterday over the Obama administration’s proposed new banking rules, our big takeaway is that it’s too complicated. Complex, convoluted rules and regulations are a sure-fire bet to be twisted and bent until loopholes big enough to drive a truck through them appear.
And, really, we’re almost two years into this mess. The problems are pretty exposed. Derivatives, leverage, bailout mentality. Why don’t the proposed rules deal with these issues in a clear, straightforward manner? As Henry David Thoreau implored us, “simplify, simplify, simplify.” Instead we get more beltway thinking. The Journal’s editorial page summed it up well yesterday:
The main idea behind the Obama Administration’s new financial revamp is essentially this: With more power and a modest reshuffling of the bureaucratic furniture, the same regulators who missed the last credit mania will somehow prevent the next one.
It’s one of those do something now ideas the government’s so fond of, like, say, the Troubled Asset Relief Program, that are adopted under duress and whose pitfalls become clear only after they’re enacted.