What makes you qualified to have an opinion about gun control? A) Knowing the difference between a magazine and a clip, and bump stocks versus full automatic weapons. B) Ability to assemble and disassemble handguns and rifles. C) If I might get shot, I get to have an opinion.
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Sure, but if only those with enough expertise on bank regulation are those who spent their career in investment banking, leaving them to dictate policy, which happened, is disastrous. And yes, this is a hard problem. But telling non-experts they cannot venture opinions is bad.
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The only workable solution I know of there was and is the still more knowledge-loaded policy of NGDPLT. More outsidery, less knowledgeable banking regulators could not have done better IMO. They couldn't have covered all the loopholes, and the answer to that is a technical one.
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But we often don't need to cover loopholes, if we stick to more basic regulations. In 2007, either continuing to limit corporate leverage, or random auditing of transactions like loans, or enforcing stricter capital req's for novel products would likely have been sufficient.
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In 2007, likely none of those things would have prevented the disaster. Grossly underpredicting a price drop would kill even a portfolio of plain vanilla loans. Random audits don't fix this. Neither does limiting leverage or capital reqs for novel products.
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Random audits of mortgages and penalties for fraud on the part of borrowers and banks would certainly have reduced the size of the bubble and reduced (not eliminated) the later problems with mortgage defaults, and hence the price drop.
End of conversation
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My understanding is that research has tended to show that the belief that people vote their own interest is more or less false. Maybe the ideal that the "involved" will advocate more effective policies is also simply false. I'd expect so.
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