Summary
Banks, Insurance companies, Investment bankers, Hedge funds - they are all up against the wall facing new regulatory pressures. The Alan Greenspan era is over. Alan Greenspan was supposed to have a magic wand with which nothing went wrong. Its like Napoleon asking for a few lucky generals - Greenspan was one such in the financial world of today. Bernanke obviously is not. In this analysis I look at some of the aspects of the changing regulatory landscape.
Analysis
1. Congress is all set to change the regulatory landscape.
2. Bernanke is being asked to explain the rationale of his actions in the backdrop of the never ending global credit crisis.
3. The accounting regulatory system is also under siege. The PCAOB is questioning auditors who are in turn questioning the plethora of Institutions policing them. No one really knows where this questioning will finally lead to.
4. We can in my opinion expect the 21st century to be a century of confused regulators in the coming years.
5. The reason I say confused regulators is because the existing political setup is questioning the very basis of existence of a market mechanism.
6. The moment the market mechanism is engaged by regulators at the nuts and bolts level it ceases to be a market environment.
7. In summary I would therefore say that expect an era of confused regulation with politics interfering and misguided development of Institutions. I would also say expect the first years of this century to be on a economic parallel with the last century. Lets see where this finally leads upto.
