Need for More Regulation in the Financial Markets

Here's a link to an excellent article about the credit crisis from this week's New Yorker Magazine. While many economists were cheering on the run-up in housing prices, here's one expert that was dubious. Here's a quote regarding the need for, yes, more regulation: “apt intervention and institutional structures are necessary for market economies to be successful.” The article continues, "Rather than waging old debates about tax cuts versus spending increases, policymakers ought to be discussing how to reform the financial system so that it serves the rest of the economy, instead of feeding off it and destabilizing it. Among the problems at hand: how to restructure Wall Street remuneration packages that encourage excessive risk-taking; restrict irresponsible lending without shutting out creditworthy borrowers; help victims of predatory practices without bailing out irresponsible lenders; and hold ratings agencies accountable for their assessments... As Minsky believed, “Economies evolve, and so, too, must economic policy.”