The risk of unintended consequences

In today’s New York Times, reporter Andrew Ross Sorkin seems to be telling us “Don’t just do something, stand there!”

His article on the clutch of new financial regulations being put forward in Congress ends forebodingly:

“All these proposals are well intentioned, and with a bit of refining, they may ultimately be the right solutions. But as we learned with the bailouts, they may come with unintended consequences.”

What new law doesn’t have unintended consequences?

Greater transparency (via congressional audit) at the Fed could imperil its political independence? Well, yes, perhaps. Subjecting secured lenders to a haircut if a borrowing bank falls into administration could make secured lending more expensive and “flighty”? Yes, that’s certainly a possibility.

When a guy who heads up one of the last two large independent investment banks left on the Street basically says that bankers can’t control themselves, it would seem the cost of inaction is greater than any of Mr. Sorkin’s unintended consequences. Sorkin’s points are duly noted, but the regulatory train’s leaving the station anyway. All aboard.