EDITORIAL: Waiting for fallout of Wall Street rout: More regulation in our future?

Waiting for fallout of Wall Street rout More regulation in our future? At IBJ deadline, Wall Street was suffering through one of the most tumultuous weeks in its history, and there was no end in sight to the worry consuming investors. The $85 billion Federal Reserve bailout of American International Group Inc. on Sept. 16 did little to shore up markets that had plunged the day before, after Lehman Brothers declared bankruptcy and Bank of America rescued Merrill Lynch. The Dow Jones industrial average fell 450 points Sept. 17, the day after the bailout, nearly equaling the 504-point drop that happened the day the Lehman/Merrill Lynch news broke. The only thing that can be said with certainty is that, without the AIG rescue, things would have been much worse.

How all of this affects local businesses remains to be seen. All that’s known is that capital will only be harder to come by in the weeks, months-perhaps years-to come. Companies like Mike’s Express Car Wash, our Enterprise Award winner (see story, page 3), that expand using their own reserves, will be rewarded.

Another safe bet in the aftermath of this week: Further regulation of investment banks and hedge funds will be a hot topic when a new president and new Congress assume power in January.

That’s entirely appropriate. There’s broad agreement that the financial crisis we find ourselves in is largely the result of the lack of oversight, both internal and external, of the exotic financial plays that brought on the collapse of Lehman and AIG.

Government regulation becomes necessary when private interests fail to regulate themselves. An absence of regulation sounds good until it results in a crisis that necessitates that the government play an even larger role-like essentially taking over the world’s largest insurer.

Striking a balance between free markets and an effective regulatory system is the challenge that awaits our country’s new leadership.

J. Patrick Rooney

Not everyone liked J. Patrick Rooney’s take on his pet issues: health insurance and public education. But you couldn’t help but admire his determination to solve some of our country’s most vexing problems.

Rooney, 80, the former CEO of Golden Rule Insurance Co., died Sept. 15, apparently in his sleep.

The colorful executive who was often associated with conservative political causes started The Educational CHOICE Charitable Trust in 1991 to provide tuition assistance to poor families who wanted to send their children to private schools. He also went to bat for the uninsured and underinsured, running a not-for-profit that helped them challenge exorbitant hospital bills. He was a leader in the creation of medical savings accounts, now known as health savings accounts.

Rooney was active in promoting what he believed in right up until the end of his life. We’ll miss his passion for innovation and his compassion for those who struggle to attain the basics: health care and a good education.