The argument against self-regulation.

Refer to
http://www.huffingtonpost.com/2009/0..._n_201557.html

The Glass-Steagall Act of 1933 defined the differences and prohibited the practice of commercial banks participating in enterprises that were the functions of investment banking, (not to be confused with their 1932 which had different purpose).

I do not pretend to understand the conflicts of interests and opportunities of fraud that’s possible when single entities have their feet within the doors of less risky forms of banking and the more risky investment and brokerage houses.
It is enough for me to appreciate that having just experience the 1929 Wall street crash and the significant deconstruction of much world’s economies, governments in 1933 were inclined to be more financially prudent and Wall Street “experts” were subject to diligent cross examination.

Within this same 1933 act, the federal deposit insurance corporation, (FDIC) was created. Due to the FDIC, confidence in USA banks recovered (and the reputation of the banking industry began being restored). The 1933 act’s purpose of limiting the acceptable risks for non-investment banks also decreased the risks of the FDIC to a similar extent.

Generally within any field, those regulated to some extent object to their regulators and the regulators’ mandates. The banking industry never ceased objecting to the intervention of “inexperienced” or “impractical” government bureaucrats. The regulated (in all fields) generally believe they can do it, (regardless of whatever “it” is), at lesser expense or time or in a superior manner.

Prior to the 2007 ‘credit crunch” Alan Greenspan, ex-chairman of the U.S. Federal Reserve Board wrote of his confidence in self regulation because CEO’s know what’s to their enterprise’s best interests. Mr. Greenspan is obviously both honorable and intelligent because he has since modified his opinion and embraced my belief in this matter.

CEO’s probably are to some degree more intelligent than most of us, but that’s only differences of degrees. We can all rationalize that what we believe is in our own best interests is also in our employer’s and our nation’s best interests. Having reached OUR rational conclusion, that’s what we advocate.

I greatly appreciate the Ying and Yang relationship of separation of powers and cross examinations within any human endeavors where subjective determinations are of critical importance.

Respectfully, Supposn