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Streamlined Regulation Should Be the Next Frontier of Financial Reform 

November 24, 2014
Marshall Lux, Robert Greene, American Banker

In a 2010 book on the financial crisis, federal judge Richard Posner decried the rush to reform then sweeping Washington. "Before ambitious plans are hatched," he wrote, "with the inevitable delays and confusion and unintended consequences, there is first the need to assure that regulators are employing their existing powers to the full." Reform, he wrote, requires cool heads and rational minds — and time to develop appropriate remedies.

Posner was not confident that cool heads would prevail.

He was right to worry: These are anxious times. Six years after the crisis, the economy is only slowly recovering and household wealth continues to fall. Amidst other national concerns, financial regulatory reform is a backburner issue. It shouldn't be. The Dodd-Frank Wall Street Reform and Consumer Protection Act was a noble effort at reform. But ambitious plans have spawned unintended consequences, perhaps the most important of which is that having made the effort, we now believe we have completed the task of ensuring the health and efficiency of the financial system.

Read more: American Banker

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