Who Regulates the Regulators? (Glenn Loury & Ross Levine)

[T.G.G.P]

I enjoyed the last Glenn/Ross diavlog even though I am now at a loss to remember what Ross actually said. Looking forward to this.

I'm not going to object to informal communication (don't even police officers do that with drug gangs?), but how about a more adversarial setting (I know there are arguments that adversarial regulatory systems work worse, but I'm going to ignore that for the time being). Steve Sailer often references Wal-Mart's unpleasant meeting environments, could regulators pull the same move? People in the actual business could be excluded from Jackson Hole and would have to beg their neighborhood regulator for tidbits about what the head of the SEC said at dinner.

I thought the sports referee analogy was cool.

I think Ross' referee argument is more robust (so it will apply even if it turns out regulators aren't too interested in joining firms they regulate later on), but his objection that he personally knows these people is weak. We tend to like our friends and want to think the best of them, but we are unbiased judges of them. Just like his referees and regulators are not unbiased regarding the activity they supervise!

Glenn, if you're mad about all this unemployment, Chicago Fed President Charlie Evans can tell you who to blame.

Glenn's complaint about millions of underwater homeowners debt overhang depressing the economy is a macro story, but changing the rules by which banks and borrowers agree to pay back mortgages is micro regulation. If monetary authorities did their job and made sure nominal expenditures hadn't collapsed, the housing market would be in less dire straits.

Don't banks have to recognize a loss if they foreclose and don't sell the house for as much as they were short? There was legislation that was supposed to encourage mortgage modification, and it failed miserably.