Project for Philosophical Evaluations of the Economy |
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Regulating financial markets in times of prolific financial innovation
Open questions to FED Chairman Bernanke, first drafted on Sept. 24, published on Sept. 25, 2008
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Dear Mr. Chairman, the Q&A session that you held on Sept. 24 with the House Finance Committee in order to
defend the proposed economic rescue plan has left Noah denkt™ with a couple of questions that it takes the
liberty to pose here:
Open questions to FED Chairman Bernanke, first drafted on Sept. 24, published on Sept. 25, 2008
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Dear Mr. Chairman, the Q&A session that you held on Sept. 24 with the House Finance Committee in order to
defend the proposed economic rescue plan has left Noah denkt™ with a couple of questions that it takes the
liberty to pose here:
- Do you agree that the strength of free markets lies in its innovative zest?
- Do you agree that this innovative zest of free markets have is not limited to technical innovations but also
involves the discovery of new marketing and financial instruments?
- If you agree that the free financial markets have a tremendous power to be innovative do you then not
believe that financial regulation and government oversight will have to be in a perennial catch-up position
with reality as far as administrating these new instruments is concerned?
- If you agree that regulatory authorities are eternally caught up in desperate race to catch up with reality do
you then not believe that considerable self-disciplinary strength is required by financial players in order to
avoid the treacherous temptations that regulatory loopholes provide for them?
- If you agree with the notion that considerable self-disciplinary powers are needed to avoid the pitfalls of
seemingly lucrative innovative instruments, do you then not believe that financial players will need an acute
memory of the disastrous effects that unrestrained behaviour can entail in order to be able to muster the
management prudence that fast evolving markets require?
- Do you believe that the painful consequences of a cushioned recession (as it is being discussed now) will
be sufficient to have financial leaders opt for a better internal risk control capability in future?
- Do you anticipate that the brunt of the pain that this cushioned recession is going to produce will be felt by
leaders in the financial community or do you believe that it will be primarily the average taxpayer who will
feel this pain most?
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