October 27, 2009
Regarding ‘Lawmaker: ‘Financial regulation must be tailored’‘:
There is so much speculation on how best to proceed in regulating the financial sector it is hard to know where to begin. However, it appears to me that the main criterion is not one of regulation but one of consumer confidence.
To this end, what the powers that be should be looking at is a measure or series of measures that promote that confidence whilst, at the same time, allowing the financial institutions to get on with doing what they are best at: making lots of money – for everyone.
The present crisis was spawned in the main from poor management of US attempts to ease credit markets for homeowners and loan markets, particularly in population areas that had previously been ‘red-lined’.
The speed of this process from 2002 to 2008 was accelerated without any real thought about how to underwrite the underlying capital expenditure investment of the loan market.
The problem therefore lies in the way interest is applied in such a way that the equity of the product is made robust with regard to market fluctuation.
It is all about consumer confidence. My choice would entail passing the present quantitive easing by governments to one of quantitive easing by the end consumer without hitting everyone with excessive tax reforms against rising budget deficits – which will be of no long term benefit to anyone.
Mr N S GradyAuthor : Letters to the EurActiv editor