Hot New Job Opportunity— Regulator

Looking for a new career path? Regulation is the place to be. National regulators, regional regulators, international regulators, your era has arrived. Germany chancellor Angela Merkel and British Prime Minister Gordon Brown  were calling for global economic regulators, even a UN Economic Council, to keep tabs on the financial system. “What we're looking for is a far more effective early warning system,” said Brown.

Like it or not, said buyout king Henry Kravis, the regulators are coming to the world of private equity and hedge funds. And you are thinking: not a moment too soon.  The hedge fund industry, among others, has spent the last couple of years ferociously fending off any proposal for subjecting it to regulation, under the notion that having those bureaucrats eyeballing  their risk exposure somehow stifles innovation. And that self-interest is the best regulator of all. Those ideas got destroyed in the last couple of months, along with not a few hedge funds. Now the tune has changed. There will be no more resistance. “Regulation is coming and it's coming in a big way,” said Donald Gogel, ceo of the  U.S. private equity firm Clayton, Dubilier & Rice.

Given that regulators are getting their share of the blame for the meltdown—where was the SEC in stopping CDOs from getting out of hand? Why didn't Treasury stop the banks from overleveraging?—it's sort of curious that there's such a clamor for the bureaucrats now. But the sentiment is that it's better to have some regulators, any regulators, rather than have large areas of finance running amok. “One thing's that been revealed from the disasters in financial service is there are all sorts of gaps in regulatory architecture and all sorts of opportunities for arbitrage,” noted Peter Sands, chairman of HSBC.  It's those gaps that have created all the mischief, he said.  “We've had a vicious interaction with regulated banks and shadow banks. If it walks like a bank and quacks like a bank it ought to be regulated like a bank.”

It's not just the finance industry that's clamoring for more regulators. Ken Powell, the ceo of General Mills, a food company that has the happy status of being recession resistant, joined the chorus of  regulation boosters. It's not that he wants more regulations, just more regulators. Think of that— A captain of industry demanding more interference from the government. “Clearly we need more regulatory capacity. FDA funding has declined,” said Powell. “Our industry is arguing that that has to be reversed.”

So here's one area where there could be some  job growth. No one was offering an opinion as to where they are going to find all these new regulators. Certainly there is an ample pool of finance industry talent made redundant by the crisis who might now be available to do the job. They obviously know where the weaknesses are, since they exploited them until the whole thing exploded. By the same token, when you hear the first complaints about this new crop of regulators—maybe at this same meeting next year— you will have a good indication that the crisis is easing.