New Regulatory Changes? Now?

by: John M. Mason

As I was reading the Wall Street Journal on Saturday morning, I saw the headline, “Bush Administration Rushes Regulatory Changes Before Time Is Up.”

My heartbeat accelerated. I started reading the first paragraph: "The Bush administration is hurrying to push through regulatory changes in politically sensitive areas such as endangered-species protection…WHAT! policy…Huh?...and other areas."

The article stated that this is the rush to “cement new regulations” by pushing through “last-minute changes” intended to cement the legacy of the out-going President. These regulations are consistent with the philosophy of the current administration and are aimed toward stamping the imprint of the administration on Washington, D. C. before its turns out the lights on January 19, 2009.

Whoa! I thought we had a financial crisis that was brought on by insufficient regulation - a crisis that is now spreading deeper and deeper into the bowels of

Main Street
, and the world. What about the progress of the bailout of all the financial institutions of the country; the rescue of homeowners that are facing foreclosure; the plans being announced daily to lay off thousands of more workers and the deepening recession? What about the financial world that is going to exist after the collapse of 2008? What about the institutions and regulation that are going to define the “game” and its players in the future?

The problem is that when it comes to dealing with the financial crisis, this administration - the gang that couldn’t shoot straight - doesn’t have a consistent vision or philosophy to deal with the economic and financial situation. We saw this in the “breakdown” of former Fed Chairman Alan Greenspan in his appearance before Congress this past week. Greenspan commented that he was in “a state of shocked disbelief.” Helicopter Ben, the current Fed Chairman, is tossing billions and billions of dollars out into the world! Treasury Secretary Paulson is running around trying this plan, and then changing the plan, and then changing the plan again, and then changing the plan again…

The problem is there is no one in charge, and no one has any idea what to do.

Need I say it again, the ‘decider’ has decided to take it on the lam - the leader of the free world is nowhere to be seen.

Perhaps we should take some sage advice from Anna Schwartz who was the co-author with Nobel prize-winner Milton Friedman of A Monetary History of the United States. An interview with Ms. Schwartz appeared in the most recent issue of Barron’s, “Tearing Into the Fed and Treasury Plans” (October 27, 2008). I don’t agree with all Ms. Schwartz has to say, but here is some wisdom I think is very important for all of us to consider.

The way you clear up problems in the credit market is through coming up with a clear, understandable plan and then executing it precisely.

My hope is that they will solve the problem by doing a bang-up job. However, there’s already been talk about having to come back for more money. The risk of being unclear and doing things ad hoc is that you gradually destroy faith in the financial system.

If we keep making things more uncertain, and feeding the fear without minimizing the problems, we could eventually make it so that Americans lose faith in their financial system.

I just don’t see where the “clear, reasonable plan” is going to come from. At the present time, I also don’t see where the people are that are going to “execute the plan precisely.” Moreover, with the economy falling deeper and deeper into a recession, a leader has not yet arisen that is providing us with the “philosophy and vision” we need to guide us through the recovery.

The scary thing coming out of the interview with Ms. Schwartz is the concern about a “loss of faith” and the “feeding of fear.” Where is the leader we need?