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When it comes to regulation it’s a matter of quality, not quantity
By Lauren | December 8, 2008
In the wake of the subprime mortgage meltdown on Wall Street, there’s been a lot of talk in Washington about whether we need “more” or “less” regulation of the financial services industry. These conversations completely miss the point.
Regulation is not something that can or should be measured quantitatively because it’s not the length of the regulation that matters but, rather, its effectiveness. A well-written regulation prohibits illegal and unethical conduct, sets reasonable standards for quality, and provides for meaningful, but not excessively intrusive, government oversight of the regulated industry. Enforcement is important, too – it doesn’t matter how well a regulation is written if the agency responsible for enforcement doesn’t make sure that industry is in compliance.
Unfortunately, regulations sometimes get written too quickly or without careful attention to other, pre-existing rules. When that happens, regulated industries find themselves having to comply with layers of complicated and even conflicting requirements. We then hear that the industry is “over-regulated” when the real problem is that the industry simply isn’t being regulated effectively.
The new Obama Administration is likely to face significant pressure for “more” regulation of the financial services industry. Before anyone puts pen to paper (or fingers to keyboard, as the case may be), the Obama Administration would be wise to think about what rules are really needed to protect the American people and how they can be effectively enforced. The financial services industry probably doesn’t need “more” regulation - better regulation and improved enforcement should be the new Administration’s goals.
Topics: Business Ethics, Presidential Campaign, Social Ethics, corporate responsibility, ethics |
January 13th, 2009 at 9:53 pm
[...] presents When it comes to regulation it’s a matter of quality, not quantity posted at The Business Ethics Blog, saying, “Two watchwords when it comes to [...]