Financial services regulation is a mess! And a lot of businesses would like to keep it that way! Banking institutions have from 3 to 5 regulators, insurance companies are regulated by individual states, the SEC has been ineffective in monitoring "over-the-counter" transactions that are not defined as securities. And all those "cracks" offer profit-making opportunity. But they also create unmonitored and unmeasured risks!
I've often said: "The only thing worse than a financial problem is the government deciding it has the solution!" But . . .
. . . in this case, I think it's time for some measured action to re-organize financial industry regulations.
The last time we did this was after the Crash of 1929, and in the midst of the Great Depression, when we created the Securities and Exchange Commission (yes the "and" is an integral part of the name), along with other rules designed to separate commercial banking (loans and deposits) from investment banking (securities and capital formation). Well, in the last 15 those walls came down, through piecemeal legislation.
Now, no one agency can maintain effective regulation or even information gathering -- without stepping on another agency's territory. Bureaucratic rivalries and political gamesmanship have left our financial system in a vulnerable state. If the Fed has to stand behind the entire system to avoid a crash -- then there must be some oversight.
Note: My comments are my own, and I may have some conflict because I serve on the Board of CME Group (Chicago Mercantile Exchange and Chicago Board of Trade) which are regulated by the CFTC, and have a great interest in how regulation sorts itself out.
So the key to fashioning a sensible, comprehensive, and a-political regulatory system will be a willingness to see what really works in a competitive global financial marketplace. On that score, I'm always hopeful and mostly disappointed at government solutions.
Terry Savage writes a syndicated personal finance column for the 
With all the chaos going on in this country's housing problems and the ruaway gas prices, I need to ask why do we take our Alaska Crude Oil and put it on Tankers and send them to Anacortse, WA where there are two refineries that make gas and then send the gas to Japan.
Is is not strange that we need to import oil into the US when we aldeady have a lot of of oil of our own and refineries all over our country. We all remember Texas, Oklahoma and the offshore platforms around our country. But, a lot of people do not know that the Mountian Time Zone is loaded with gas and oil all over that area. Just drive along the interstate 80 is enough to say where does all this gas and oil going. Or get on the Interstate going through Colorado and look at all the wells and those are not water wells.
I loved the statement that the refineries are outdated and we have to take them down. What happened to the moral fiber of this counrty. It is time for answers from Congress and the Statehouses arond the country to tell the people that we are being sold down the river of the Cartels.
As a former Chicago resident, and soon to be going back home very soon, I am in Anacortes, WA where two refineries are going gang busters and not many rail cars or trucks leave the refinery, it leaves on tankers and this is going on all over the West Coast.
It is time for straight answers from government and find out why we have to be on the of the barrel.
Dear Terry,
First of all I wish Ann all the best. Can anyone say Enron?
My question here regards retirement plans that a company offers stock in said, exclusively. Are alternate plans provided? Seems to me to put all your eggs in that basket is pure folly {sorry,ann}
BTW.. Loved your interview on WCPT this past saturday with Dick Kay
SAVAGE SAYS: Oh thanks, re the interview. Dick and I have been disagreeing on this stuff for years! But we always end up laughing - he's really a great guy.
It's against a company's fiduciary duty under ERISA to "match" only in company stock, and THEN to restrict movement out of that stock. For accounting reasons, and for "control" reasons, in the past many companies paid their company match to a 40lk plan in company stock. There used to be restrictions requiring holding that stock. Not anymore!
Dear Ms. Savage, If Bush would have had his way years ago and Social Security was privatized and Wall Street latched onto our hard-earned funds where would our investments be now with all this mess? I would be willing to stand on a street corner with my walker and have seniors sign a petition saying KEEP YOUR GRUBBY HANDS OFF SOCIAL SECURITY! I worked for almost 50 years, 30 years for Corporate America. I ended up with no job, no pension, and all the money I invested in the screwed up corporation...gone! While the CEO walked away with a bloated severance package worth $30 million plus perks. Now, all I have is my Social Security ...ain't much but it keeps me fed, clothed and with a roof over my head.
SAVAGE SAYS: Amen.
Dear Ms. Savage,
Having worked in banking I well recall the belief in laissez faire in good times and the same people seeking government bailouts in bad times. Clearly, 'saving' people from the consequences of their bad decisions will only assure more of the same irresponsible behavior.
Since the excesses in the financial community appear to be running on 10-year-or-so cycles it seems that there's a short attention span. Echoes of Santayana's view that people who don't know history are doomed to repeat it?
Perhaps nationalization and orderly liquidation of those entities "too big to fail" would bring some discipline to the moguls of Wall Street.
By the way, I think that recent years' deemphasis of regulatory agencies, e.g. CPSC, MSHA (Dept of Labor), FDA etc., are a partial factor in our current problems. In effect we wait until the coal mine blows up or catches fire or people are dying from adulterated Heparin to realize that strong regulators keep the irresponsible "honest."
Sincerely,
Dick
PS
I don't know if you recall our meeting at CNN's studio in the Wrigley Building in 1997, when I was interviewed for the Insight program about the then-topical $C6.2-billion Bre-X Indonesian-gold-mining scam.
PPS If you do recall you might recall my magazine cover for that month that referred to Mark Twain's famous definition of a mine (from his early journalistic experience with Nevada's Comstock Lode): a hole in the ground with a fool at the bottom and a liar at the top.
SAVAGE SAYS: I do remember meeting you, and that you had great insight into that scam (which readers might remember involved a "gold mine" that was "seeded" with gold nuggets -- a total fraud, which collapsed to the tune of hundreds of millions of dollars of investors' money down the "hole in the ground."
As to your comments above, the only thing worse than our current problems is the idea of the government "nationanlizing" - running -- any business!
Banks have encroached on investment banking and trading which makes them very vulnerable to huge losses which get paid for by the US taxpayer. The Glass-Stengal Act has been basically repealed and I do not think the banking lobby ever suffers a loss or reversal once they get what they want. Banks and insurance companies are at each other's throats battling for more easy money making schemes. Insurance companies like states rights oversight since it is easier to market products that way.
The SEC should not take over the CFTC since they do a bad job now regulating or not regulating the hedge funds and other core equity groups. Banks have forgotten how to loan money and only prosper when they have a monopoly. Bring Back the Savings and Loan Companies. They are gone because Bankers and the FDIC like it that way! Saving and loan companies never charges the high account fees and offered much higher CD rates too!
SAVAGE SAYS: Interesting comment. Just don't forget that the S&Ls got in trouble because they took insured deposits and made crazy loans, knowing the government would eventually bail them out! They "taught" the investment banks that the government would save insitutions that are "too big to fail."