Conventional wisdom is that Big Business wants total deregulation, and that regulation is a check on Big Business. That’s just not true.
The latest example, Wall Street “fat cats,” as Obama calls them, eagerly pushing for financial regulation to pass. From Politico:
Wall Street grows eager for reform
While regulatory reform remains stalled in partisan gridlock in Washington, senior executives on Wall Street with both Republican and Democratic political leanings are increasingly eager to see something significant pass to help restore the industry’s credibility with a deeply skeptical public.
Why would the big banks want to be regulated? Off the top of my head, I can see a few reasons:
- The Confidence Game: Wall Streeters need us regular dupes to believe that investing money with them is safe. Any regulation will come with grand claims from politicians that consumers are now protected from Wall Street abuse.
- The Overhead Smash: More regulation adds to the cost of doing business. That can cut into profits, but more importantly, it will keep out new entrants.
- Too Big to Fail: Obama’s proposed regulations include an implicit bailout. Once your downside is covered by the taxpayer, you’re freed up to take more risks.
