Zachery Kouwe has posted a letter from Oaktree Capital's Howard Marks:
Why were the highly regulated banks ground zero for the consequences of the financial crisis, while unregulated hedge funds were relatively unscathed? I just can't imagine that regulators will ever have the ability to fully anticipate the consequences of change in the fast-developing financial system, or to foresee the development of new problems for which rules and responses have yet to be drawn up. Here's how Peter Sands, chief executive of Standard Chartered, was quoted in the Financial Times of January 27: "It is not clear why some regulators who were there before the crisis should believe they now have all the right solutions."
What regulator would have been able to make a difference in protecting our financial institutions (and the overall economy) from the developments of 2004-07? And given how valuable his skills would be in the private sector, how long would he have remained a regulator?
