In the aftermath of the financial meltdown—from Lehman Brothers to Madoff to countless mortgage brokers—there was universal recognition that the government failed in its basic obligations to protect investors and consumers.
There appears to be almost universal agreement that regulation must be tightened and updated. The assumption is that existing regulations were themselves insufficient.
Alan Greenspan and Christopher Cox, of the Federal Reserve and the SEC respectively, have publicly repudiated their previous free market stances.
What’s interesting is that there is comparatively little focus on the manifest failure of the relevant agencies to effectively enforce laws already on the books.
Though many of the financial depredations of recent years were innovative in their particulars, they would be recognized by our ancestors as something very familiar: fraud.
Effects of Strict Law Enforcement
Those on all sides of the political spectrum should agree on the need for strict law enforcement:
—Enforcement has powerful deterrent effects.
—It creates an atmosphere in which ethical behavior is rewarded.
—It creates pressure to simplify statutes and regulations.
—It ensures that our lawmakers and administrators take care in drafting new laws.
Longtime Presidential Failure to Enforce Laws Vigorously
We all know that law enforcement has been eroding for many years:
—Presidents have quietly turned down enforcement of laws they don’t prefer. Some have even clung to the standard of criminal defendants as a lifeline for themselves.
—Some have cut corners to achieve their desired policy goals. Immigration laws comprise perhaps the most spectacular in this category. Yet the phenomenon is much broader.
—Congress passes laws to demonstrate its commitment to a public policy–but laws remain unenforced, or fitfully enforced with little meaningful oversight. Whole areas of laws are simply not enforced; some may not even be enforceable in their current form.
Environmental Law: A Success Story
Vigorous saw enforcement can have an extraordinary effect in changing public attitudes and behavior that many accept as intractable. There is no better example than the tremendous success of environmental law enforcement over the past generation.
One hopes that strict enforcement of the law becomes a focus of public discussion and debate in the context of reconstructing our financial system.
Reliable law enforcement, with its powerful deterrent effect, can ensure that the creativity of business and financial enterprises will be turned more toward complying with laws than evading them.
At the same time, environmental regulation is often unnecessarily complex and burdensome for those seeking to comply–and those seeking to enforce.
All would be better served by a smart combination of regulatory reform and enforcement vigor. Too often, though the shared goals are overlooked in political debates and oversight.
Enforcement and Regulation
Some who oppose statutes or their purposes seek relief through limitations on enforcement.
Others who object to regulatory complexity nonetheless support the statutory mission, or, at the least, seek to comply in good faith.
Some who support strict enforcement do not give sufficient credence to calls for regulatory simplicity.
Ultimately, strict enforcement and regulatory accountability and simplicity should be viewed as complementary.
What Would Theodore Roosevelt Do?
When in doubt, our officials might well turn to the example of a president who had first-hand law enforcement experience–and brought a legendary law enforcement mindset to the federal government.
What would Theodore Roosevelt do?
Enforcement and Regulation