Obviously the European Central Bank needs to impose more regulations.

I don’t recall if I blogged about this news story I heard the other day that struck me as pretty stupid or not, but I’m going to encapsulate it here so that neither you nor I have to go digging back through archives. Apparently, this week, the head of the European Central Bank, publicly stated that the growing European financial crisis is the fault of the Bush Administration because the latter failed to regulate the U.S. mortgage and housing markets enough. Implicit in this comment is the implication that sufficient regulation prevents problems, which is not surprising considering the source. European Central Banks are among the most regulated of all industries after all; when the various European governments say “jump,” the Central Banks says, “How high?” They are institutionally pre-disposed to be pro-regulation.

So, you can imagine how interesting I found it this morning when I heard of the lastest scandal in one of France’s big banks. Apparently, a rogue employee used his knowledge of the system to direct the investment of quite a bit of money resulting in the loss of something like seven billion dollars to the bank. Imagine, in this highly regulated bank, that such a travesty could occur! It leads to one of two possible conclusions:

• Either more regulation should have been in place (the conclusion reached by the bank); or

• God forbid, perhaps sometimes all the regulation in the world can’t prevent the occasional crisis.