The Federal Financial Forum

(Reuters) – Global financial regulators are likely to impede growth rather than foster it unless they are better policed, an economist warned policymakers on Saturday.

While regulatory reform since the 2007-09 financial crisis has given added clout to government regulators, the concentration of power is likely to do more harm than good unless the regulators themselves are subject to proper oversight, Brown University economist Ross Levine said in a paper presented at the Kansas City Federal Reserve Bank’s annual meeting here.

“As more responsibilities are heaped on official regulatory agencies, it is unclear whether they have either the capabilities or the incentives to properly shape the incentives of financial systems,” he said in the paper.

From: The New Republic 

Richard A. Posner

If the notion that we are merely living through the aftereffects of a mere “recession” that ended in 2009 sounds somewhat ridiculous, that’s because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions.

From: Washington Post

By Zachary A. Goldfarb and Neil Irwin

Barely two years after the financial crisis ended, Treasury Secretary Timothy F. Geithner and Federal Reserve Chairman Ben S. Bernanke were back at it about a week ago. They were working the weekend phones with their counterparts in Europe, urging them to use overwhelming force to contain the continent’s spreading debt crisis, which was unnerving markets on both sides of the Atlantic.

Geithner and Bernanke could speak with authority. As two of the architects of the United States’ own financial rescue starting in 2008, they had eschewed half-measures, instead marshaling hundreds of billions of dollars to bail out the banks and successfully head off a new Great Depression.

From: Forbes

Did you hear the one about Goldman Sachs selling investors mortgage-backed securities that plummeted in value soon after?

By chance you haven’t the National Credit Union Administration, an independent federal agency that regulates federal credit unions, is suing Goldman Sachs on that allegation and is seeking $491 million in damages.

From the NCUA press release:

Editor’s Note:  The following article discusses the DC Circuit Court of Appeal’s decision to vacate an SEC rule because the agency failed to appropriately analyze the costs and benefits of their regulation.  In the attached Opinion, the court held that “the Commission acted arbitrarily and capriciously for having failed once again — as it did most recently in American Equity Investment Life Insurance Company v. SEC. . . and before that in Chamber of Commerce, 412 F.3d at 136 — adequately to assess the economic effects of a new rule. Here the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters.”  The court decision further emphasizes the imperative that agencies adhere to the good government laws that regulate the regulators.