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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (61495)	4/24/2008 2:17:09 PM
From: Cogito	Read Replies (1) \| Respond to of 542061

>>I'm not particularly confident that the federal bureaucracy would be better at identifying the early stages of a problem and figuring out the appropriate response, than the risk management employees at banks and investment banks with billions on the line. If they didn't see the problem coming until it was to late to prevent it, why would federal employees have so much more ability to do so? Risks where underestimated, the adjustment to that will cause some pain, but I don't think having someone else estimate the risks solves the problem.<< Tim - The people at the banks had (and have) a strong motive to continue to underestimate the risks, since these new instruments were making them so much money. The federal employees, charged with overseeing the stability of the financial system, would be motivated to spot undue risk. That's not to say they necessarily would, but motives matter. That's why financial markets don't do an especially good job of regulating themselves. - Allen