Former Treasury secretary Henry Paulson had not read through the financial-regulation bill that is expected to pass the Senate this week, because who has? It's 2,000 pages! Even Barney Frank probably has an issue of A Bear's Life tucked inside his copy. Still, like everyone, Hank is familiar with the broad brush strokes — he thinks giving the government resolution authority, i.e., enabling them to unwind failing institutions without forcing them into bankruptcy, is a good idea, if a tad "too little, too late," as he really could have used it for Lehman Brothers and AIG; and he thinks the Volcker Rule is pretty lame, although that is probably not going to go very far anyway. But, to be honest, he says to Andrew Ross Sorkin, his bare toes curling into the rug at his vacation home in Illinois, it's a little like closing the barn door after the horses are already out.
“As I've thought about it, this is very people-driven,” he said. “A lot of this is about the people who have the responsibility for the regulation when there isn’t a crisis and the people who have the responsibility during a crisis. Unless you believe that the big financial institutions were intentionally trying to blow themselves up, they were unable to spot a number of the issues." He continued: “I think it is asking a lot for regulators to be perfect — because they won’t be.
Oh, wait. Did he say that out loud? He meant: It's a great bill. Good job, guys.
But what you have here is a mechanism that gives regulation a much greater chance to be successful.”