Interesting to read about Chairman of the Federal Reserve Paul Volker and his early warning about the risks of deregulation. PBS has the story:

Thomas Theobald, then vice chairman of Citicorp, argues that three “outside checks” on corporate misbehavior had emerged since 1933: “a very effective” SEC; knowledgeable investors, and “very sophisticated” rating agencies. Volcker is unconvinced, and expresses his fear that lenders will recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public.

Oh, that was in 1987.

In August 1987, Alan Greenspan — formerly a director of J.P. Morgan and a proponent of banking deregulation — becomes chairman of the Federal Reserve Board. One reason Greenspan favors greater deregulation is to help U.S. banks compete with big foreign institutions.

It seems to me that if you have to change the rules or remove the referees to win, then maybe you do not really intend to play the game anymore. Imagine basketball with no refs, baseball with no umpire. This is not my idea of the best way to compete. The power-vacuum of deregulation not only allows for unsustainable excess and fraud (cheating on the field) but also spirals downward into a match of sheer aggression and violence. So deregulation leads to far higher operating costs, more permanent failure and decreased quality of service. Who wins from that equation?