Monday, March 31, 2008
Supervising the very complex derivative products of the banks and of the rest of the financial system would be an enormous technical challenge. The institutions themselves -- paying very high salaries and having their own survival at risk -- got it wrong. Would the Fed get it right?
Martin Feldstein, from the Wall Street Journal this morning. A useful rule: Regulators regulate when they have access to better information than the regulated. But also useful: Regulation to minimize systemic risk. Can the Fed do better?