Why George Soros should be regulated, even now

July 27, 2011, 11:16 PM UTC
DAVOS/SWITZERLAND, 27JAN10 - George Soros, Cha...
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FORTUNE — Poor George Soros. Regulations have forced the swashbuckling hedge fund manager to return money to investors, shutter his hedge fund, and turn his fearsome investment operation into a mere “family office.” What’s the guy going to do for fun anymore?

Yesterday, Soros’ sons Robert and Jonathan sent a letter to outside investors in Soros Fund Management’s Quantum Group of Funds, citing the “unfortunate consequence of…new circumstances” as the reason behind the decision. The new circumstance, of course, is the Dodd-Frank Act, which would have required SFM to register with the SEC by March 2012. Despite the family’s massive wealth—Soros and kin are worth a reported $25 billion—this proved too burdensome a prospect, so they’re kicking out long-time investors in order to remain exempt from the new regulations.

In doing so, Soros joins two other downtrodden billionaires who recently threw in the towel instead of grappling with a bit of new paperwork: Stanley Druckenmiller and Carl Icahn. What a bunch of babies.

Of course, the usual suspects chimed in with the expected response to the news. What, you might ask, would the Wall Street Journal editorial page have to say on the matter? Oh, something along the lines of decrying the restrictiveness of all the new red tape that Washington decided to wrap Wall Street in after it nearly broke the world. And voila! Soros isn’t just an 81-year-old who needs a break; he’s a “victim” of Dodd-Frank.

The incessant drumbeat coming out of the whole free-market crowd is that Dodd-Frank went too far, that it’s strangling the lifeblood of market capitalism. Ask any banker and he’ll sell you the same sad story. New regulations aimed at curbing recklessness will instead trickle down and make the lives of us little people less meaningful and America a lesser place. How will we ever compete again? If hedge funds have to file paperwork with the government, this whole thing is going to hell in a hand-basket.

Here’s an alternative perspective: Dodd-Frank didn’t go far enough. It’s amazing how men of such wealth are so predisposed to reject any change in the way we govern ourselves that might just make the system a little safer. Ask any unemployed American whether he would accept a little more paperwork in exchange for an actual job and you know what they would say. Maybe not an unemployed member the Tea Party, mind you. How would that party continue if it didn’t have people so angry about losing their jobs that they’re not looking for jobs, and instead protesting the fact that people want to regulate George Soros? (If I hear one more person tell me that what made America great was the ability to do whatever one wants, even if that sends the globe into a terrifying recession, then I might just…join the Tea Party.)

Even if the bad rap that big government has gotten for itself is well deserved, it’s really quite amazing that there is anyone still out there trying to make the case that we don’t need a tighter hold on the risk-taking activities of big players in the financial markets. Likewise, it’s equally absurd to think that regulators now have no need to know what the Soros family is doing with their $25 billion just because they are turning themselves into a family office. I’d suggest that we don’t scale back Dodd-Frank, but expand it. Let’s regulate family offices too. If you’re big enough to have a “family office,” for God’s sake, you’re big enough to matter.

Anyone taking issue with that can just leave a message with my “family office,” otherwise known as my home.