The Bear Stearns collapse, like Enron and Worldcom before it, has prompted loud cries for more and better market regulation: Higher quality accounting standards! Better internal controls! More rigorous enforcement! But haven’t we been getting all this in an ever-rising spiral since 1934? The headline below captures the spirit of the times — New York Times, July 4, 1934, to be precise.
Next year will mark the 75th anniversary of the founding of the U.S. Securities and Exchange Commission. It was created as a political response to the market crash of 1929. Like politicians today, those back then had to be seen as “doing something” to “protect” investors. They thought they had the answer — more regulation. Or at least they wanted voters to believe this was the answer. Continue reading