Dumbing Down Regulation: The Quest For Simpler Rules

Allowing brilliant financial regulators broad discretion doesn't work. We need simpler rules, not smarter ones

Illustration by Carl Wiens for Time

If only our financial regulations were dumber! It's not a cry you hear often. But phrased a little differently, it may be the most cogent criticism of the convoluted regulatory approach of recent decades--and one that applies to most of the Obama Administration's financial-reform proposals.

The argument goes like this: the biggest flaw in current financial regulation is not that there is too little of it or too much, but that it relies on regulators knowing best. We regulate because financial systems are fragile, prone to booms and busts that can have harmful effects on the real economy. But regulators aren't...

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