Excerpt: Mike Mayo's Exile on Wall Street - WSJ.com

It's easy to understand the appeal of certain regulation. If we'd had the right oversight in place, we would have limited the degree of the financial crisis, which included bailouts measured in hundreds of billions of dollars and millions of people losing their homes due to foreclosures. But we also would have sacrificed innovations in credit and a vibrant financial sector.

Moreover, the real problem with regulation is that it often doesn't work very well, in part because it's always considering problems in the rearview mirror. The financial system today is almost dizzyingly complex and moving at light speed, and new rules tend to address fairly precise things, like banning specific types of securities or deals.

Emphasis is mine. The opiate of government capability to actually have a positive impact on the long-term health of an industry or nation is highly questionable. We need to recognize that government is political, that they dole out favors to those that they like therefore creating winners and losers within the context of any intervention that they make. This is just not efficient nor effective. These interventions can be arbitrary and ultimately creates lower value for the nation as a whole.

Excerpt: Mike Mayo's Exile on Wall Street - WSJ.com