Professor James Van Horne, of Stanford University, recently wrote an article identifying sixteen United States’ credit crises during the last two hundred years. Even if he were off by one or two, Enough! I remember too many in my lifetime. As a way forward, I suggest the next set of regulation rid itself of three premises:
- Sophisticated investors need less protection, and
- People, unchecked by peers, will honor large dollar contracts
- Business models should be independent of financial structure
Alan Greenspan notoriously reiterated that our economic systems relies on trust. Unfortunately, the reality suggest that too much trust facilitates financial crisis. Read more
