The problem is that when the stakes are high enough, businesses always will have incentives to comply with the new regulations or rules and then simply shift effort elsewhere to recoup their losses.
Banks, like almost every other business that works under any federal regulations, are like water seeping through cracks in the rock.
The financial reform bill will ultimately fail. When there are huge financial stakes, smart people will find ways to evade the rules and strike out in new areas. That observation is simply a matter of historical record. Sarbanes Oxley rules designed to prevent Enron style failures have not prevented any of the current wave of failures. As nearly as anybody can determine, Sarbanes Oxley, despite imposing huge costs on public companies, prevented nothing and protected nobody.
Every set of regulations essentially fights the last war. But that never seems to deter people from thinking they can prevent the next problem by protecting against the last one. That's virtually never the case.
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