Is More Regulation the Answer? How About Personal Accountability?

The overwhelming consensus seems to be that the current crisis in the financial markets is a result of too little regulation.

Well, I've seen regulation, and I doubt it. Would the regulators have seen this any better than the professionals in the markets did?

I am working on my own take on what happened. It won't be finished for a long, long time, but currently the elements look pretty simple to me: a failure to recognize the magnitude of overpricing in US real estate, and its implications for the financial system and global investment.

It's another bubble. But a huge bubble, the vastness of which few seem to have understood.

How would regulation help?

My approach - and as with many of my approaches, this one will never see the light of day - is to modify the system of limited liability for those who manage corporate fiduciares.

In other words, put the personal assets of those individuals who manage other people's money at some degree of risk.

Will that mean no one will work in the sector any more? Absolutely not. The rewards will still be too compelling. But there will be a downside, and maybe it will concentrate the minds of those who do this work - who are among our best and brightest.

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