Author: David Schwartz J.D. CPA
In a piece published June 14, Peter J. Wallison, Fellow at the American Enterprise Institute, argues against imposing any new regulation on shadow banking markets and firms without without convincing proof they need it. According to Wallison, the calls from regulators and others for additional regulation of so-called “shadow banks” are simply a rush to judgment. Further, he believes that the failure of Lehman and failures and bailouts of other non-financial firms during the financial crisis are not evidence that shadow banking firms and markets are inherently unstable and need regulation. In his view, the financial crisis was a one-of-a-kind event that overwhelmed all forms of regulation, and took both regulated banks and unregulated non-banks by surprise. Failure under these conditions, according to Wallison, says nothing about the inherent stability of shadow banks.