"Rules of the Game"

Secretary Geithner has proposed new rules of the game for finance. Rules matter. Enforcement probably matters even more. I am not necessarily opposed to the idea. But imagine if the Federal Reserve Board was the arbiter of risk monitoring as CalculatedRisk pointed out this morning.

According to Greenspan in 2005 "we don't perceive that there is a national bubble", just "a little froth", and even in March 2007 Bernanke said "the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained".

If the new risk czar is not capable of detecting the systemic risk, what good are they?