What Bush means by this is a puzzle:
One of the key achievements was to establish certain principles and take certain actions for adapting our financial systems to the realities of the 21st century. Part of the regulatory structures that are in place were 20th century regulatory structures. And obviously, you know, the financial industry went way beyond them. And the question is, how do we establish good regulatory structure without destroying the incentive to innovate, without destroying the marketplace.
The evolving regulatory structures in place between the last Great Depression and the looming Extra-Great Depression actually worked reasonably well. Innovation thrived; the marketplace functioned. It was the more recent dismantling of regulation in the name of promoting the sacred forces of the free market that made the current crisis possible. The financial industry went "way beyond" the regulatory structure because there wasn't one. The government provided no effective check against lending, investment and marketing practices that ranged from unacceptably risky to fraudulent.
Whether the 21st Century Bush is able to reconcile his identity as a free market person and his newly gained appreciation of "a good regulatory structure" is utterly irrelevant. 65 days, 18 hours, 55 minutes and change remain in Bush's term as of this writing. (Click link to check the up-to-the-second countdown.)
