I am the first to admit that I don't know the specifics of Obama's new plan to regulate the banks. But I will say that on a philosophical level I can say that I just don't understand how it can work because it just doesn't take into account the fact that people in a free society will find a way to do whatever they want to do. In other words, you can't pass laws against stupid. Instead, you have to allow life to punish the stupid so that people can learn for themselves.
More specifically, Obama says that he wants to pass a law so that no financial institution will get "too big to fail". Okay, how can this law work when any company that approaches this limit can just split into two closely aligned corporations that are owned by the same people?
Obama says that one of our problems is that banks invest with money that people put into savings accounts, and then that money is at risk. Therefore, he proposes strictly regulating how that money can be invested. Here's what will happen if you push that plan through. Banks will pay very little for CD's or for passbook savings, becauuse they can't really find a place to invest money where there isn't some measure of risk. Then someone will invent some new type of financial institution which is not called a bank, but which will do the exact same thing that banks do now. Namely, they will invest money which is deposited in accounts and pay back money upon request.
I don't see how any amount of regulation will stop people from doing what they want to do. Nor do I see why we should prevent people from doing what they want to do. The price of freedom is the risk of failure. I'm willing to live with that risk.
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