Loan Regulation Probably Wouldn't Have Prevented This Crisis

I've made the case that de-regulation is not the culprit in the current financial crisis. It's a complex issue for sure, but I think this article provides good insight. Jack Guttentag, a professor at Wharton School of Business, explains why regulation may not be the answer.

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Deregulation, meaning the scrapping of existing regulations, was not a factor in the crisis. The only significant financial deregulation in the past three decades applied to commercial banks. Restrictions on where they could have branches and on their involvement in investment banking were both removed. Most economists, including me, believe that these actions made the banks stronger than they would have been otherwise.

Regulation in itself is a weak defense against financial crises. One major reason is that it tends to look backward, similar to generals fighting the last war. ...
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