As for the Fed, I would much prefer to strip all enforcement activity from the Fed and give it to a newly created super-regulator (combining SEC, FDIC, OCC, OTS, etc). The Fed needs its distance – and we need the Fed to keep its distance. We need a Fed that can say, as Volker did, “damn the politics, I’m raising rates.” That requires two things in short supply: a Fed Chairman with courage and a Fed with a clear mandate to preserve the dollar at all costs.

With you on the insurance front, and I’ll raise you a pensions issue. State pension funds ought to be legally barred from running a deficit (ie they must be fully funded on a termination basis at all times). I’d put that in my federalism category: states cannot do stupid shit (like Florida’s idea of state-issued hurricane insurance), because we do not have an effective system of allowing state bankruptcy.

Excellent point on the securitization requirements, though there is an argument to be made that organizations take less risks with their own capital, e.g., back when trading houses and investment banks were partnerships. Mozilo would still have been long and levered through 2005, but my guess is he would have slowed things down by the end of 2006. But the main point is that I agree that the securitization minimums probably don’t do much. It’s big boys selling to big boys, and doesn’t really address systemic risk that comes about with the quantity and type of securitization.

Disagree on your point about the Fed. As many problems as the Fed has, it’s the best regulator we have to watch over banks and large financial institutions. SEC is incapable of it. Treasury certainly can’t do it. It’s not in the FDIC’s wheelhouse.

Back to agreeing with you on the consumer element. So far, it’s a good idea in theory, but no more hidden fees won’t stop consumers from racking up $30,000 credit card bills.

I’m also very disappointed by the lack of federal insurance regulation, though there still may be room to work that in. If there’s anyone who’s worse at regulating financial institutions than the federal government, it’s the state governments.