Kevin Drum, in writing how the drop-dead-simple-in-concept Volcker Rule became, once finally interpreted into regulation, a loophole-riddled behemoth that the chief of the American Bankers Association grumbled was "
a rule whose preamble alone is 215 pages, with 381 footnotes to boot":
[N]o one should take too seriously Republican complaints about burdensome regulations strangling the economy. The truth is that most reformers prefer fairly simple rules. In the tax world, they'd prefer to simply tax all income. In the environmental world, they'd prefer to set firm limits for pollutants. In the financial world, they'd prefer blunt rules that cut off risky activity at its knees.
But businesses don't like simple rules, because simple rules are hard to evade. So they lobby endlessly for exemptions both big and small. This is why we end up with tax subsidies for bow-and-arrow makers. It's why we end up with environmental rules that treat a hundred different industries a hundred different ways. It's why financial regulators don't enact simple leverage rules or place firm asset caps on firm size. Those would be hard to get around and might genuinely eat into bank profits. Complex rules, conversely, are the meat and drink of $500-per-hour lawyers and whiz kid engineers. If the rules are complicated enough, smart lawyers can always find ways around them. And American corporations employ lots of smart lawyers.
The proposed implementation of the Volcker Rule is as complex as it is because the banks demanded, and received, a wide assortment of loopholes, exemptions, "clarifications" and other nonsense meant to allow banks to avoid the spirit of the law. Now they're complaining that the complexity will make it difficult to for them to follow even those rules. Go figure.
We keep coming down to the same question: is our government even capable of passing effective regulatory law against corporate abuse, at this point, or do they exist merely to legitimize it?
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