This morning on CNBC Governor John Corzine (D) of New Jersey blamed the current crises in the market on what he called the "laissez faire" mood of regulation which we have seen "over the past decade." (Video below). Does he even believe this stuff? Lehman Brothers, like Bear Stearns and others was basically lobotomized by Corzine’s former colleague Eliot Spitzer, who severed communication between the research divisions of these firms from the trading operations. He did this in the name of "conflict of interest." Who’s interest was served by severing the higher brain functions of these firms from the rest of the nervous systems? With one populist fell swoop, allegedly designed to make Wall Street safer for investors, Spitzer made it dumber.
Then there’s AIG , another victim of steamroller populism a la Spitzer. One of the coolest and most venerable heads in finance was forced out, and AIG’s descent began. Let’s make perfect clear to Mr. Corzine and his friends in the United States congress, the current cascade of financial crises doesn’t have a blooming thing to do with "laissez faire" capitalism. These banks are regulated to the hilt. When (then) Senator Corzine and others decided to use the Enron scandal to ramp up the volume of new Wall Street regulations, I and other supply siders warned about the unintended consequences of their actions. “Legislate in haste, repent at leisure,” said John Adams and he was right.