In the aftermath of every 'boom and bust' that has occurred within the global financial system throughout history, policymakers and stakeholders have proposed and implemented financial reform as a means to prevent future financial failures. In many cases the lobby from the big investment banks is to strong, and many reform acts don't make it through congress. The ones that do like the Glass-Steagall Act end up being repealed, and therefore we end up with a financial system that is vulnerable. Thus, when it is exposed to free-market forces such as profligacy, irrational exuberance, and greed, it cracks at the seams, and if not rescued, it breaks down completely.
Nothing has exhibited this better than the recent financial crisis. There is a fair amount of rhetoric circulating at the moment surrounding financial reform, and reinstating the Glass-Steagall Act has been one such mention. Compensation has been another. These, as well as many other areas within the financial system need be to critically evaluated, and recommendations for reform reform put forward. If we are to stave off future financial crisis, it is imperative that all loopholes are blocked up, necessary regulation is implemented, and a healthy financial system is created as a result. Moreover, we must be careful not to over-regulate, as this could also be to the detriment of the system. Constrained capital markets are as good as price-fixing in closed economy.
Nothing has exhibited this better than the recent financial crisis. There is a fair amount of rhetoric circulating at the moment surrounding financial reform, and reinstating the Glass-Steagall Act has been one such mention. Compensation has been another. These, as well as many other areas within the financial system need be to critically evaluated, and recommendations for reform reform put forward. If we are to stave off future financial crisis, it is imperative that all loopholes are blocked up, necessary regulation is implemented, and a healthy financial system is created as a result. Moreover, we must be careful not to over-regulate, as this could also be to the detriment of the system. Constrained capital markets are as good as price-fixing in closed economy.