New Ways of Cheating

June 12th, 2013 by Rick Drain

Once again we see the familiar problem with regulating the financial industry: so many companies will cheat if they can. It’s seldom the “outright lying” sort of cheating, but rather the “maybe we can hide this little bent rule” sort. They’ll take a little more risk than they’re allowed to, hoping to get a little more profit than they would have, but setting themselves up for a failure and loss that will seem to come out of nowhere.

Even as the Dodd-Frank regulations are being delayed and neutered by the industry, some companies are trying to sneak around long-established rules. When they do that, they risk devastating their general-public customers, or getting another taxpayer bailout, or both.

Here’s an interesting post by Mary Williams Walsh in the New York Times’ Dealbook blog:

Insurers Inflating Books, New York Regulator Says