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Friday, November 12, 2004

The end of regulatory transparency 

Eliot Spitzer is demonstrating that any attorney general with enough brass and ambition can destroy transparency and consistency in federal regulation of business, be it securities exchange regulation, broker-dealer regulation, or the Food, Drug and Cosmetic Act. Our national prosperity depends on transparency and consistency in federal regulation, but that does not matter to Spitzer, who is willing to exploit his office and the size of his state's economy to discipline any corporation and humiliate any federal regulator that comes to his attention. Even if one agrees with Spitzer's immediate ends in any particular case, he has tremendously undermined the credibility of federal regulators, which is not to anybody's benefit. How? If federal regulators cannot deliver certainty in their regulation, then businesses will be far less willing to surrender to federal oversight without a fight. Why not resist federal regulation if there is no prospect that it will effectively preempt separate regulation by the fifty states?

1 Comments:

By Blogger TomM, at Fri Nov 12, 08:28:00 PM:

I could not agree more. Mr. Spitzer has usurped his office's power to utterly destroy a giant firm and the image of an entire state! 3000 families will be going to bed without supper because he decided to headline a practice that has been with the insurance industry since it's beginnings. The terrorist attacks dealt a vicious blow to the securities industry and our Attorney General decides to attack the head of the fastest growing exchange on the planet, partly because he accepted a large payment for his efforts in bringing the NASDAQ back to life in days after the devastating blow.

One could surmise that little people get hurt by excessive referral payments or large pay packages, but the chilling immediate effect on people who lost their income certainly should count for something. And it;s just the tip of the iceberg -- Before he is done there won't be a fortune 500 firm left in Manhattan. But you are right and I am amazed that someone from Washington has not landed very hard on our two Senators to reign in this dangerous loose cannon before decides to interpret the FDA regs to his liking.  

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