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?
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