Obama and Regulation

President Obama and his team have come forward with a program designed to increase regulatory oversight of the financial markets, firms, and consumers. This is sweeping stuff, the likes of which we've not seen for decades. A couple of comments.

First, it is difficult, if not impossible, to avoid the conclusion that the regulatory structure in place failed to do its job in this latest financial crisis. "Regulator Shopping", the cozy relationship between regulators, lobbyists, and Congress....lots of places where strengthening regulatory bodies makes sense.

Second, Conservatives must avoid the reflex reaction that increased regulation is BAD (in this case). The perception out there (for good or bad) is that the "free market" failed us. This is nonsense. A poorly regulated market in which there was a LACK OF FREEDOM failed us--and by a lack of freedom I mean the market was tilted in a manner in which people lost any sense of there being a "moral hazard" associated with investing. There was no perception of risk. This is not a free-market, this is a fantasy market. Regulation of financial markets must strive to create more freedom, and there is an excellent opportunity here with this package of proposals to make a freer, fairer market than that which failed us.

Conservatives MUST NOT abandon the playing field here...this is our turf, and we should work with the President to strengthen our markets by making them more free.