That sure was fast. It’s only been a week or so since federal prosecutors said they wouldn’t bring criminal charges against former New York Governor Eliot Spitzer for soliciting prostitutes, and Spitzer is already stepping back into his old role as the top cop for Wall Street.
In an op-ed in Sunday’s Washington Post, Spitzer blamed free-market ideology for our financial mess and called for much tigher regulation. “No major market problem has been resolved through self-regulation, because individual competitive behaviour doesn’t concern itself with the larger market,” he writes.
“The new president’s team must soon get to the root causes of the mistakes that have brought us to the economic precipice. Yes, we have all derided the explosion of leverage, the failure to regulate derivatives, the flood of subprime lending that was bound to default and the excesses of CEO compensation. But these are all mere manifestations of three deeper structural problems that require greater attention: misconceptions about what a “free market” really is, a continuing breakdown in corporate governance and an antiquated and incoherent federal financial regulatory framework”
Spitzer echoes calls from Treasury Secretary Hank Paulson for a more centralized regulatory bureacracy, critiicizing the alphabet soup of agencies currently charged with market regulation. And he warns that the huge financial bailout may be setting us up for another round of dangerous practices on Wall Street.
“The so-called moral hazard will serve to devalue risk in the market, and this too will have a debilitating long-term effect on capital flows,” he writes.
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