This aspect of the financial regulatory overhaul has gotten very little attention, but it’s both important and well-described by a Washington Post infographic, so here goes:
The idea here was that we needed to fear unduly harsh regulators, and make sure agencies had an incentive to be appropriately business friendly. So you get what we had here last financial crisis. The new model is designed to avoid incentives for unduly lax regulation:
This doesn’t single-handedly solve all our problems, and the very obviousness of the idea tended to lead it to be underplayed, but it’s obvious because it’s a good idea and an important one to boot. But it hadn’t been done before because banks liked the old system. Now it’s changing. That’s progress. And this is what I mean by saying that there’s something short-sighted about all the focus on what’s not in the bill. There’s a lot that’s not in the bill. Maybe future bills will tackle some of those issues. But there’s really quite a lot that is in the bill, and it’s basically good stuff.