It's very difficult to write regulation for the financial services industry. We've been talking about increased regulation for banks and hedge funds for a long time and very little has been put in place.
Obama has bigger issues on his plate like the health care plan and the wars in Asia. I think that's what he's going to be focused on.
When he gets around to regulation, I think he's going to focus on the issues where the greatest numbers of voters care. Those issues are credit cards, mortgages, and executive pay.
There are two areas where I think regulation is needed. The first is bank leverage. The rules are on the books and it's up to the Fed to implement them. That's more of a case of implementation rather than regulation.
The second is derivatives and there we really need to write some new regulation providing greater transparency, margins, risk sensitivity, and awareness.
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