There has been a lot of complaining about the new Dodd-Frank financial regulation reform bill -- or FinReg -- by bloggers and politicians. However, most critics (and supporters) haven't read the 2,200+ pages of the bill. The reactions are driven more by pre-existing politics and shorthand biases for the general concept of governmental regulation.If you think market actors are greedy and that the government keeps everyone honest, you support FinReg. If you think the government is made up of incompetent bureaucrats who get in the way of efficient markets and choice, then you think FinReg is terrible. It's easy to be cynical about a big reform bill like this (and I am about a number of points in the bill). However, there is some good here. I believe that the politicians have used this bill as an opportunity to move a lot of little balls forward. Critics trot out phrases like "this bill will do nothing to stop the next crisis." On one hand, they're right that it's hard for traders (let alone politicians) to predict the future. On the other hand, do they seriously think it's best to sit back after 2008 and do nothing? In my view, here are the best parts of FinReg:
Unfortunately, there were more disappointments with the FinReg bill than there were positive surprises. Here are the worst parts of FinReg:
A hedge fund manager I know recently went to visit Washington DC politicians and assess their financial acumen. He came away dismayed at the lack of understanding of these very serious issues which will impact us, our children and grandchildren. One senator estimated that only 14 of his colleagues were "true" fiscal conservatives (in the sense of wanting to see the government spend less than its tax revenues). That's shocking. If we want to start with serious financial reform, let's start there. At the time of publication, Jackson held no positions in stocks mentioned.
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