Promiscuity

1. The Crash of 1929 brought about the Securities Act of 1933, the first to regulate the offer and sale of securities;
2. The early 2000s Enron and WorldCom scandals were the cause behind Sarbanes-Oxley (2002), tackling accounting fraud through enhanced internal audit and governance requirements;
3. The 2008 global financial crisis motivated Dodd-Frank (2010), directed at the soft spots of the US economy that contributed towards the collapse of the financial system, such as predatory mortgage lending or inaccurate credit ratings.

But after a bubble bursts, why be reactive when we have the chance to be proactive?

More important than preventing the reoccurrence of whatever it was that caused the late bubble to burst, is mitigating its effects, working in anticipation to prevent the building up of risk wherever it may be found next.

What does Dodd-Frank, other than its origin, have in common with Europe’s current non-performing loan problem? Nothing – and that’s the problem.

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Ultimately it all boils down to the promiscuity between policies and fucking politics.

Large financial scandals lead to an outcry, which leads to major pieces of reactionary regulation.

That’s all Dodd-Frank is: State-imposed reactionary delegated legislation inspired by public demand. Albeit necessary, should it be the priority?