The Baseline Scenario What happened to the global economy and what we can do about it Patchwork Fixes, Conflicting Motives, And Other Things To Avoid

Improving the regulation of the financial sector is a prime topic of conversation amongst financial economists, and appropriately so. Most agree that massive failures of financial regulation were one, if not perhaps the largest, cause of the 2008 meltdown.

When the conversation turns to the specifics of what needs to be regulated, how regulation should work, and what agencies should be involved, the range of views is tremendous. There is agreement that some kind of prudent regulation is needed, as is investor and consumer protection, but that’s about it. Fueled by billions of dollars of lobbying and purchased research, everyone has their own idea. One super-regulator? Council of regulators? Control bankers compensation schemes? Exchange-trade them? The cacophony is deafening.