Thank goodness for all the regulations coming out of Washington DC, right?  Dodd-Frank laws, SEC fines, Swap Execution Facilities (“SEFs”).  Don;t you feel so much safer?  In fact, the list of new rules and agencies are mind numbing.  So the government adds agencies and jobs to its payroll, the costs to the entities they regulate goes up as they spend more time and money on compliance, the legal and accounting industries cheer, and end users (you and me) face higher costs for the products and services we want and need.

In fact, the regulators are always a step or two behind the operators.  “Operators” in any industry are those individuals and organizations who determine (or create) what the public wants.  Operators then spend lots of time and energy to internally build products and services, find partnerships, market their products, all at a cost that the public is willing to pay and that generates benefits to the operators.  Operators are forward thinking and resourceful.

http://dealbook.nytimes.com/2013/04/10/seeking-relief-banks-shift-risk-to-murkier-corners/?hp

Regulators are generally accountants and attorneys.  Rarely have they been in the position to need to create and generate and respond to client demands.  Regulators craft rules and review companies after the fact, but regulators are not forward thinking.

The world needs regulators, no doubt.  But regulators seem to be failing again and again, especially here in the US.  In the UK and other jurisdictions, regulators tend to use principal-based rule making; act in the best interest of your clients, be transparent, know your customers.  In the US regulations are generally rules based; don’t do this, and don’t do that.  But by telling operators what they can not do, and what they have to do, they leave a lot of grey area.  And grey area’s are where bad operators take advantage of people and rules, and where good operators fear to tread because of potential retribution from regulators.  So what about a re-think of the way regulators in the US go about their business?  What about regulators hiring former operators to help them think forward?  Is it unreasonable to ask that leadership in Washington DC to think like operators themselves and not like the attorneys and accountants that they are?