As Congress prepares to give the Fed more regulatory power, and to expand financial regulation more generally, it is useful to review the Fed’s track record as a regulator:

Foreclosures already pocked Chicago’s poorer neighborhoods but the downtown still was booming as the Federal Reserve Bank of Chicago convened its annual conference in May 2007.

The keynote speaker, Federal Reserve Chairman Ben S. Bernanke, assured the bankers and businessmen gathered at the Westin Hotel on Michigan Avenue that their prosperity was not threatened by the plight of borrowers struggling to repay high-cost subprime loans.

Bernanke, who was in charge of regulating the nation’s largest banks, told the audience that these firms were not at risk. He said most were not even involved in subprime lending. And the broader economy, he concluded, would be fine.

“Importantly, we see no serious broad spillover to banks or thrift institutions from the problems in the subprime market,” Bernanke said. “The troubled lenders, for the most part, have not been institutions with federally insured deposits.”

He was wrong. Five of the 10 largest subprime lenders during the previous year were banks regulated by the Fed. Even as Bernanke spoke, the spillover from subprime lending was driving the banking industry into a historic crisis that some firms would not survive. And the upheaval would shove the economy into recession.

The number of gun permits issued in Massachusetts surged by more than 15 percent over the past two years, reversing nearly a decade of steady declines and marking a pronounced departure for a state known for its antigun sentiment.

The magnitude of the rise, evident in nearly every corner of the state, surprised law enforcement officials, and gun advocates and opponents alike.

What’s the explanation for this surge?  Perhaps fear that Democrats would enact new gun control laws, perhaps just increased economic anxiety.  You tell me.

After two decades, Congress has voted to lift a ban on federal funding of needle exchange programs. AIDS activists are cheering the move, saying it legitimizes needle exchange in the nationwide fight against HIV/AIDS.

This issue illustrates perfectly the cascade of unintended consequences that arises from misguided policies.  The root of the problem here is drug prohibition, because it fosters restrictions on the legal sale of syringes and, worse, raises drug prices, which encourages users to inject to get a big bang for the buck.

If needles were legally available without a prescription, many users would purchase them and avoid sharing dirty needles, even under prohibition.

And if drugs were legal, they would be far cheaper, so most users would consume via less risky methods than injection.

Government funding for needle exchanges, given current law, is compassionate and good for the public health.  Yet it puts government in the awkward position of funding an activity that many citizens find distasteful or even abhorrent.

So yet again, legalization is the answer.

Over the objections of gambling opponents in Congress, the Obama administration has granted a request by US Representative Barney Frank to delay a long-scheduled federal crackdown on illegal Internet poker and casino sites.

Frank sought the six-month reprieve so he could keep working on a pet issue: legalizing online gambling.

The best part of the story is this:

You won’t find the chairman of the House Financial Services Committee at a poker table or roulette wheel, as Frank doesn’t gamble. But he said he does not want the government telling people what to do with their own money.

Frank (who happens to be my congressman) is absolutely right about this.  Too bad he does not want to let people keep more their own money in the first place.

Should the U.S. ban re-importation of medicines produced by U.S. manufacturers and then sold in other countries? This issue has arisen again as part of the health care debate, and it does not have an obvious answer.

The problem is that price controls on pharmaceuticals in countries like Canada cause prices for some drugs to be much lower abroad.  The difference is often large enough to generate a substantial incentive for re-importation.  This lowers profits for the U.S. manufacturer and reduces the incentive to develop new drugs.

If patent protection is important for innovation, then it seems to make sense to ban re-importation given the price controls imposed by other countries.

Yet I think the situation is more complicated.

First, the pratical issues involved in banning re-important are daunting.  To reduce the flow materially, the U.S. would have to ramp up scrutiny at border crossings and inspect a substantial fraction of packages delivered across borders.  More broadly, any attempt to impede trade in one product is likely to inhibit trade more generally.

Second, drug companies can reduce the risk of re-importation by refusing to sell their products in countries that insist on excessively low prices.

My hunch, therefore, is that U.S. policy should enforce patent protection within our borders, but if patent owners sell their products overseas, they assume the risks of re-importation.  I make no claim this policy is “optimal,” but I suspect it is better than the alternative.

This position is even more compelling if in fact patent protection is not necessary to generate a reasonable amount of innovation.  David Levine at Washington University makes exactly this argument.   I am not yet convinced David is right, but he raises good objections to the claim that patent protection is benefical overall.

is making the security lines at airports sufficiently long that you have plenty of time to untie your shoelaces before you reach the conveyer belt.

The Obama administration is again pressing banks to increase lending, explicitly sugesting that banks “owe” the country because of the bailouts.  Chief administration economist Larry Summers, for example, said Sunday:

“We were there for them and the banks need to do everything they can to be sure they’re there for customers across this country,” Summers said in an interview on ABC’s “This Week” program.

Similarly,

President Obama pressured the heads of the nation’s biggest banks on Monday to take “extraordinary” steps to revive lending for small businesses and homeowners, drawing a firm commitment from one large bank to make more loans and vaguer assurances from others.

This kind of jaw-boning, with its implicit threats, is one crucial negative of the bailouts, and it will contaminate policy for a long time.

It is true that the banks benefited from taxpayer largesse.  But they presumably have a reason now for their limited lending: they do not see profitable lending opportunities.  If the administration bludgeons them into increasing credit, the banks will end up making bad loans that ultimately fail, creating yet another excuse for bailouts.

We made one huge mistake: the bailout.  We should not compound it with another mistake: interfering with private lending decisions.   Instead, we must lest the recovery take its course.  And we should recognize that one reason for the slow recovery is private sector concern about incessant government meddling.

With unemployment stuck around 10 percent, President Obama has pledged “to take every responsible step to accelerate the pace of job growth.” Here’s a thought: Instead of trying to “create” jobs by tweaking this tax break or increasing that spending program, why not stop doing things that destroy jobs?

The author of that incredibly sensible view, Charles Lange of the Washington Post editorial staff, suggests three specifics:

End federal protectionism and price supports for sugar.

Repeal the Davis-Bacon Act. … This law requires employers to pay the “prevailing” local wage on federally funded projects.

Reduce the federal minimum wage.

And if we start thinking this way, we can find other good examples.  For example, we could eliminate professional licensure in medicine, law, and other occupations.

“I mean, honest, you can’t blame the Salahis for going where they’re not invited.  I mean, isn’t that our foreign policy?”

Britain’s financiers and entrepreneurs are quitting the UK at a rate of 10 a week to avoid Labour’s new 50% taxes.

The burgeoning exodus threatens to deepen a £178 billion black hole in the public finances and leave middle-class voters with higher taxes for years to come, figures obtained from Companies House reveal.

The number of directors of British businesses registered as living in the low-tax centres of Jersey, Guernsey or the Isle of Man has risen by almost 500 to 6,729 in the past 12 months.

The British Virgin Islands is also a popular destination, with 615 directors of UK companies now based in the Caribbean tax haven — an 18% rise on a year ago.

Utterly predictable.  But at least Jersey is prospering.