A March 20, 2009 paper from Yale has tips for Obama to negotiate this crisis. Written by Michael S. Solender, a senior research scholar and visiting lecturer at Yale Law School, How the Obama Administration Should Regulate the Financial Sector puts forth five key attributes that US regulators should have. These are:
1. The right people, which could be those with industry experience — this is something Indian regulators desperately need. In India, the only financial regulator with industry experience is C.B. Bhave, chairman, Securities and Exchange Board of India; the others are bureaucrats.
2. Enough access to the companies and their employees. “No matter how capable or experienced the personnel employed by the regulatory agency, a regulator is unlikely to be able to obtain information and avert problems and crises without sustained and meaningful access to the regulated companies and their personnel.”
3. Enough information that regulators should maximise. “This will require achieving the proper balance between robust enforcement of the law and creating the proper incentives for those they regulate.”
4. Creation of an internal brain trust “to accumulate information acquired from individual companies and industries and make comparisons between companies and across industries, looking for trends and warning signs.”
5. Creation of a rapid action team empowered to act quickly in a financial emergency. “The team should draw upon different skill sets — attorneys, economists, examiners, and policymakers — and from personnel from the different financial regulatory agencies.”
I like what I read.
Blog post on Cutting the Edge