Financial Regulations

From this article on Yahoo Finance (my emphasis):

 

Wall Street profits could take a big hit if the government toughens regulations in a proposed overhaul of the U.S. financial system, the manager of the world's biggest bond fund said on Monday.

Gross referred to these Wall Street firms as "shadow banks" because they have raised billions in the capital markets, rather from savings and traditional lending. Less stringent regulations had allowed Wall Street to make riskier and more profitable bets than commercial banks.

This "shadow banking system," which consists of all the levered investment conduits, vehicles and structures created by Wall Street, is now facing liquidity constraints.

"Shadow banks will likely be forced to raise expensive capital and/or reduce the bottom line footings of their balance sheets," he said.

I tend to not be for government regulations, but in this instance I am all for them.  This is complaining that if the government toughens the regulations, then the investment bankers will have to have more capital (cash, real wealth) and less levered (debt) investments!  My response to this complaint:

 

Tough.