KPC friend Amar Bhide has an interesting piece in Barrons.
In an email, Amar writes:
This is a general problem. Well-intentioned securities laws work only too well, turning judgment and relationship based finance into anonymous, arm’s length transactions. This also discriminates against financings that can’t be easily securitized; thus we get lots of mortgaged backed securities, fewer small business loans.
Tell that to the next person who tries to say that "lack of regulation" caused the financial crisis. It's not true. STUPID regulation caused the financial crisis, and Dodd-Frank is even more stupid than what we had in 2007.
Excerpt from the article, since it's gated:
In an email, Amar writes:
This is a general problem. Well-intentioned securities laws work only too well, turning judgment and relationship based finance into anonymous, arm’s length transactions. This also discriminates against financings that can’t be easily securitized; thus we get lots of mortgaged backed securities, fewer small business loans.
Tell that to the next person who tries to say that "lack of regulation" caused the financial crisis. It's not true. STUPID regulation caused the financial crisis, and Dodd-Frank is even more stupid than what we had in 2007.
Excerpt from the article, since it's gated:
When little else was regulated in
the 19th and early 20th centuries, lawmakers kept banks on a tight leash. Even
so, we didn't get all the pieces of bank regulation right until the 1930s. In
contrast, the securities markets functioned adequately under the private rules
of the stock exchanges.