driftwood2

Will Regulation Hobble Capitalism?

Having been in various industries I can tell you that regulations have a very significant cost. However, regulation in the financial industry is entirely warranted in my opinion because history has shown the tremendous cost of not doing so. Also, it really seems to me that 80% of the "innovation" in the financial industry is actually new ways to swindle people or print money rather than anything that actually produces anything of real value. Preventing most of the "innovation" in the financial industry will only increase GDP.

S&P 500 Financial Sector Market Cap Continues to Sink

The size of these losses, especially for companies like C, BAC, MS, GC, and etc is a rough indicator of how much money will ultimately be needed to bail them out. Some optimistic individuals are of the opinion that the bailout funds already provided by the government will be enough to fix our financial system. If that were the case, why would Citi, who received a mere $45B from the government, have lost $246B in market cap? If Citi had only lost on the order by $45B, wouldn't their market cap have fallen a similar amount? The truth is, Citi alone will probably require hundreds of billions of taxpayer dollars to be made solvent. Tarp is only the beginning.