The Future of Securities Regulation Must Be an Omnibus Code

Just as Generals are always said to fight the last war, regulators are always regulating reactively. The Generals in 1914 before WW I did not foresee that the machine gun would dominate the battlefield; and they had to adjust their strategy and tactics. The regulators did not foresee the potentially destructive power of complex derivatives and now financial regulation must be totally restructured next year. What I do not want to see are many, many smaller pieces of legislation that fix pieces of the markets, like the Harkin bill regulating credit derivatives. What I want to see is a comprehensive, omnibus financial regulation code, similar in design to the 1986 federal tax code, with all regulations logically under the code sections. The vision of Louis Loss may yet be realized. But whatever shape the regulatory reform takes, the blog is committed to following and reporting on the proposals and the bills and the final legislation.