The Husband is a Certified Financial Planner (CFP) and Certified Financial Advisor (CFA). This is what he had to say:
Why the bailouts require MORE government regulation
The bailouts of Bear Stearns, Fannie Mae, and Freddie Mac, and AIG this year and the 1979 bailout of Chrysler show that if a business is large enough even a ideologically conservative administration will bail it out instead of letting it fail. This is bad — it means that investors in large companies receive the profits when times are good but the public takes the losses when things go wrong. This is unfair — it not only sticks innocent people with the cost of other people’s mistakes but it gives large companies a unfair advantage over small and medium sized companies. Even worse it will lead investors to make very risky investments, ones they would not think of making if they knew they would have to pay the full price if things go wrong.
The only way fair way to deal with this is increased regulation of companies that are too large to fail. I am generally opposed to regulation because it usually causes more problems than it fixes. However, the current situation, where big companies have an unfair advantage over small and medium sized firms, is worse than intelligent regulation.
I think it is too soon to say definitively what the regulations should be. However, I am convinced that the objective of these regulations should be to make sure that investors, not tax payers, are taking the risks that go with the rewards of investing in large companies.
You can visit The Husband’s website here, and he’s taking new clients.