Tan Kin Lian's Blog: Should financial markets be more strongly regulated?

Tuesday, November 04, 2008

Should financial markets be more strongly regulated?

This debate is conducted by the Economist magazine. 59% of readers are in of stronger regulation. Read the arguments:

http://www.economist.com/debate/days/view/225/print

Prof Joseph Stiglitz of Columbia University (who obtained 59% support) said,

Part of a new regualtory system must be a financial products safety commission, to make sure that no products bought or sold by commercial banks or pension funds are "unsafe for human consumption". Ideally, such a commission would try to encourage the kind of innovation that would protect homeowners and make our economy more efficient.

Prof Stiglitz was referring to subprime mortgages. His remarks can also apply to mini-bonds and credit linked notes.

6 comments:

zhummmeng said...: MAS must watching this and stop arguing the stupid ass crap that less regulation is good or caveat emptor by PM. Caveat Emptor sent the wrong signal to the FIs and the intermediaries. They thought they were given complete freedom to do anything to hantam the consumers. Come one, you can see that it is not wrong as you had envisaged./; November 04, 2008 10:49 AM
Anonymous said...: There is enough regulation on paper. The problem is not lack of regulation but it has to do with MAS NOT enforcing the regulation.

In fact, perhaps someone could consider a class action suit against MAS for being negligent in its duty as a a regulator. But please do not make the regulator pay fines using taxpayer money. GST is already 7%. Instead, make those civil servants pay from their own salary/bonuses/assets.; November 04, 2008 1:56 PM
Anonymous said...: Regulation, Enforcement, Governance

This would be the perfect topic on the local Double Jeopardy game show.

Imagine the laughters as the participants struggle with THE RIGHT INTERPRETATIONS.; November 04, 2008 3:50 PM
zhummmeng said...: Yes, more regulation means the insurance companies and the banks cannot play plum pudding. It also means the advisers cannot use their tongue to sell but use the steps as prescribed by the law.
Having said that , every thing depends on MAS.If it insists on hands off with more disclosure then consumers should avoid the banks and insurance companies because it will be caveat emptor. Consumers sure to lose. Banks and insurance companies can throw at you a thick prospectus and use a RM or an insurance agent to pressure you to buy or bullshit you to buy without them being implicated when things go wrong.
The existing laws cannot help you because there is self contradiction in the law. The law must be amended to remove product advice and make need based approach as compulsory and any deviation is a breach punishable by fine and revocation of license or both. This will sure send a strong signal to FIs and the intermedairies not to play play.Consumer confidence will be restored then.; November 05, 2008 12:00 AM
Unknown said...: I am sure that MAS will make some changes to the way that structured products are sold. After this fiasco, MAS cannot maintain that status quo is acceptable.

Will MAS ADMIT that its stand has shortcomings and take steps to provide protection to the current victims?; November 06, 2008 12:38 PM
Anonymous said...: Sure, action must be taken to sue MAS for sleeping and for misbehaving as regulator, for not enforcing the law against RMs, the FIs and the insurance agents.; November 06, 2008 10:10 PM