Market Regulation: A False Sense of Security

January 14th, 2009 4:47 pm  |  by  |  Published in Big Government, Blowback, Free Market, Investing, Market Regulation, Obama, Politics  |  0

John Stossel’s commentary on Townhall.com details why the recent Madoff scam brouhaha wonderfully illustrates why government regulation rarely, if ever, works, and in fact often makes things worse.

The $50-billion investment scam allegedly pulled off by Wall Street insider Bernard Madoff has ignited predictable calls for more regulation.

The “massive fraud … was made possible in part because the regulators who were assigned to oversee Wall Street dropped the ball,” said President-elect Obama.

“This scandal underscores the need for a 21st century regulatory approach,” writes Arthur Levitt Jr., former chairman of the Securities and Exchange Commission (SEC), in The Wall Street Journal.

Notice the disconnect. Regulation failed, so we need more regulation. I see it differently. Regulation failed, so let’s try free markets. That would be a change.

Regulation did indeed fail. “An executive in the securities industry, Harry Markopolos, contacted the SEC’s Boston office in May 1999, urging regulators to investigate Mr. Madoff. Mr. Markopolos continued to pursue his accusations over the past nine years,” The Wall Street Journal reported.

Continue reading at Townhall.com.

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