He says that while at the same time that these institutions are under-regulated they are also taking on more risky activities, and if another crisis erupts taxpayers might have to foot the bill again.

FORBES: Goldman Exec Wants More Regulation--Of Hedge Funds, Not Banks

At the World Economic Forum in Davos, Cohn warned that over-regulation of banks could push risky investments and activities into the hands of less regulated institutions like hedge funds, the Financial Times reports.

FORBES: Goldman Exec Wants More Regulation--Of Hedge Funds, Not Banks

In principle, such an approach would appear well justified, as our financial system has become less bank-centered and because activities or risk-taking not permitted to regulated institutions have a way of migrating to other financial firms or markets.

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Activities that are clearly illegal in the world of regulated managers of publicly traded securities, are standard operating procedure for these unregulated managers.

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Then it needs to institute the Volcker rule to isolate speculation from federally insured banking activities or bring back Glass-Steagall, which completely separated trading from regulated lending as part of New Deal reforms.

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It would be regulated by the SEC and be dependent on its own performance and not a bunch of financial activities with leverage that few can understand, much less put a dollar value on.

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Heavily regulated lenders that to some degree owed their existence to a federal government that heavily subsidized their activities had a greater incentive to lend without regard to the means of the borrower, and this was made even easier by a Congress that relaxed the standards imposed on Fannie and Freddie when it came to purchasing those loans.

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