How Government Intervention Could Possibly Affect Capital Markets Adversely - Research Paper Example

Tom Quaadman of the Chamber Post cited in his article the editorial of New York Times, saying that the new Administration of President Obama must now work on new regulation policies. He went on to say that in the light of the present economic crisis, the present government regulations have missed the warning signals and failed to protect the investors. This, he said is a clear indication that the present regulations need to be updated that should have been done even before the crisis began. Quaadman said that certain gray areas in present policies must be addressed to allow the efficient movement of the marketplace.

Innovations in the regulations are in place, he said, to allow market economic growth. There must be a missing link or dark sports in the mortgage policies that have triggered the economic crisis, as implied in some actions of government authorities. George Stephanopoulos from ABC News reports that President Obama is inclined to support a government plan to place mortgage giants Fannie Mae and Freddie Mac under federal control. (ABC News, 08 Sept. 2008)  In this interview, Pres. Obama is firm in his resolve not to bail out shareholders, executives, and management of Fannie Mae and Freddie Mac because they made a lot of money at the expense of the public because of the lack of regulations.

He said that he would not let the culprits get away with because “All those were private. We don’t want to make all those losses suddenly public and they get away without taking a haircut." (Stephanopoulos). Here, we see an example that a lack of proper regulations poses adverse effects to public investors. The report of Tom Quaadman (Dec. 2008) showed the conclusion of a bi-partisan commission of the US which reported ineffective policies of the government which affect the following: * We are now operating in a truly global economy and are facing unprecedented competition from around the world (not necessarily a bad thing); * Our litigation system and outdated economic policies were placing our corporations and markets at a competitive disadvantage; and * We have a 21st-century economy that is saddled by an early 20th-century regulatory architecture.

Source: Tom Quaadman. (2008)Discussions and conclusions.The intentions of any government should always be towards the benefit of its nation, its economy, and its subjects. However, times are rapidly changing, technology is fast improving, and regulations are sometimes found wanting, lagging behind that for some reasons become the cause for market failure and losses. Conclusions gathered from articles reviewed showed that there is really a need for fast-changing policy regulations that need an intervention of the government because only government authorities have the capability for the mechanism of change.