Hacker News Reader

Comment by rayiner | Hacker News Reader

That doesn't make any sense. The more you regulate, the more banks need in-house regulatory folks and the more opportunities you have to go through the revolving door.

Deregulation is not a good thing for people who want to go in-house doing regulatory work.

View on HN

That's wrong. That kind of regulation comes from the legislature. It's an outside force. The effects of a regulator's actions on their ability to join banks afterwards are measured independently of legislature regulation. What I'm talking about is the people whose job it is to enforce that regulation (the people we call "regulators"). Their incentive is to not enforce it as strongly as they could or should. They "adapt" their policy enforcement to fit what people believe in industry right now, which is why they let all these banks peddle bad loans and commit massive fraud. The reason they "adapt" is contained in my original post.

Congress only lays out the general contours of the regulatory scheme. It's the regulators that impose the specific requirements and define what they mean.

That is the case with Dodd-Frank. That is not usually the case with regulation. Normally it goes "here are the rules, execute." Dodd-Frank is a nightmare exactly because they just have an outline full of blanks. It turns out regulators are not that good at 1. Enforcing regulation or 2. Writing regulation. The reason for this is because they have no incentive to.

A friendly, helpful regulator will get job offers to work for the firms he is regulating.

A tough regulator will not.

Reply on news.ycombinator.com