In a working paper for the National Bureau of Economic Analysis, prepared for a conference to be held next week at Cambridge University, Mr. Kane assigned some of the blame for the current credit crisis to international regulatory competition, in which national regulators, fearful of seeing business go overseas, dared not be too tough.... Ever since the Great Depression, the government has tried to limit the leverage available to the public in the American stock market. But regulators, led by Alan Greenspan, the former chairman of the Federal Reserve, thought innovation would be hampered, and financial activity driven overseas, if there were any attempts to impose limits on leverage in the unregulated markets.
What caused the lack of regulation? Competitiveness. The invisible hand is slapping us!