Another classic from the Streetwise Professor, taking aim at his favourite target; Dodd-Frank.
In recent days there have been numerous articles about myriad issues in clearing–collateral, margining, capital requirements, and on and on–all of which are (a) unresolved, and (b) of first order systemic importance. All the important details were left to the end–most likely because those that demanded the system remade it, and wrote legislation demanding its remaking didn’t even know what the relevant details are.
An entire system that evolved organically with all of the complexity and interconnectedness that implies is being re-engineered on the fly. Anyone even marginally cognizant of the complexity of the system would have been too humble to even contemplate remaking it root and branch.
But unfortunately, the marginally cognizant weren’t in charge. The imperious, overconfident, ignorant, and foolish were–some were all of the above.
It’s more than a little worrying to know these lunatics are actually in charge of the Dodd Frank Asylum.