Regulation Is The Mother Of Invention

Yesterday The Washington Post ran this article. Treasury Secretary Paulson is calling for more, if only temporary, regulation of investment banks.  He’s finally realized that the investment bank community has come up with a lot of other ways to invest money that flies under the regulation radar.

Does this really surprise anyone?  They came up with new ways to slide money around regulation.  They’ve had so much time to do it, over 30 years.  It happened because regulation limited their ability to make money.  So they invented new ways to make money.

People claim regulation stifles growth and innovation, however greed goes a long way towards compensating.  I think the regulation is needed, given the fact that investment banks have proven they cannot be trusted to regulate themselves.  Of course, any extra regulation that is added will cause them to come up with new ways to bypass the new regulation.  This probably isn’t a bad thing, since it will give rise to new money making opportunities for people.