Dodd-Frank 2.0: reforming regulatory structure
In an interesting speech, Senator Elizabeth Warren throws down the gauntlet and calls for reform of the financial regulatory structure that was put in place during the Great Depression. At the heart of her speech is her embrace of the common sense notion: nobody makes good financial decisions when blindly betting. As she put it:
Markets work only if people can see and understand the products they are buying, only if people can reasonably compare one product to another, only if people can’t get fooled into taking on far more risk than they realize just so that some fly-by-night company can turn a quick profit and move on. That’s true for families buying mortgages and for pension plans buying complex financial instruments.
The Transparency Label Initiative™ is the regulatory structure reform for realizing this common sense notion and eliminating the possibility of investors blindly betting when they do not intend to.
One of the benefits of the Initiative is, unlike combining bank regulators or forcing the break-up of the Too Big to Fail banks or changing the tax code, it doesn’t require any additional legislation or regulation before it can deliver and effectively end unintentional blindly betting.
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