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Abstract:
The United States needs to consolidate the over 115 existing state and federal agencies that regulate banking, securities and insurance firms and their products and services into a single financial services regulator, a U.S. Financial Services Agency (US FSA). The US FSA would be able to regulate more effectively the U.S. financial services industry than the existing regulatory regime. The current U.S. financial regulatory regime suffers from a range of problems, including an inability to anticipate and plan for future financial crises, an inability by regulators to quickly adapt to market innovations and developments, inconsistent regulations for financial products and firms that are competitors in the market, and the capture of agencies focused on a single sector of the financial services industry by the firms that they regulate. In addition, the U.S. financial regulatory regime is one of the most expensive in the world, costing 12 times more than the United Kingdom's regime and 86 times more than Germany's regime. The US FSA would eliminate or significantly reduce these problems as well as provide more cost effective and transparent regulation of the financial services industry than is available under the current system.

Single financial regulator, financial services, banking, securities, insurance, regulation

Abstract:
How nations regulate financial services (banking, insurance, and securities) has changed dramatically in the past decade as 16 nations, including the United Kingdom, Germany and Japan, have consolidated their financial regulatory agencies into a single national agency. One of the nations resisting this trend, however, is the United States.

U.S. resistance is due in part to a concern that the costs of such consolidation will exceed its benefits. While numerous studies have been conducted comparing the costs of various single financial regulators around the world with the United States regime, none of these studies has controlled for differences in culture and regulatory intensity between the United States and these other countries. Thus, it is not clear if the United States would achieve substantial cost savings if it merely consolidated its financial regulators.

My paper attempts to address this problem by examining the costs of six different regulatory structures used by the states within the United States, which range from separate agencies for each financial services industry to a single agency that regulates all financial services and organizes its departments based on regulatory objectives such as prudential concerns and market conduct objectives. Examining how the states within the United States regulate financial services eliminates some of the problems, like differences in regulatory intensity and culture, which arise when one compares how different countries regulate financial services. My paper offers a way of filtering out these differences and focusing on whether a single regulatory agency regulates more efficiently than multiple agencies.

financial services, financial regulation, banking, securities, insurance

Abstract:
While the federal government has had the option of regulating insurance since the decision by the U.S. Supreme Court in the United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533 (1944), the states have retained almost exclusive control over insurance regulation. Within the past seven years, Congress, however, has considered three different methods of federalizing insurance regulation. One would require the states to adopt uniform laws and it was embodied in the State Modernization and Regulatory Transparency Act (the "SMART Act"). Another would give insurance companies the option of seeking a federal insurance charter instead of a state insurance charter. This method was embodied in the National Insurance Act of 2007 ("NIA"). The third would require multistate insurers to obtain a federal charter and only allow single-state insurers to remain subject to state regulation. This method was embodied in the Insurance Consumer Protection Act ("ICPA"). Some members of the insurance industry see the federalization of insurance regulation as a mean of eliminating the problems in the current state system, which they view as costly, cumbersome and confusing.

In the hearings before Congress regarding the proposals for federalizing insurance, state regulators and consumer advocates have repeatedly stated that insurance is a "unique" financial service. The opponents of federalizing insurance use this uniqueness to justify why insurance regulation should only be done by the states. The proponents of federalizing insurance use this uniqueness to justify why a completely new agency must be created at the federal level if the federal government is going to begin to regulate insurance.

Both sides are mistaken to view insurance as a completely, unique financial service. While insurance may have been a completely distinct financial service decades ago, it no longer is. Today insurance products are part of a continuum of financial services that are increasingly fungible with one another. The distinctiveness of insurance will only diminish with time as more hybrid products are being developed every year. These products combine elements of banking products and insurance products or of securities products and insurance products. None of the current proposals to federalize insurance recognizes the extent to which the boundaries between insurance products and other financial services products have disappeared. As a result, the current proposals will not adequately address the problems facing regulators.

This article will discuss three alternative structures would place the regulation of insurance in the context of the evolving financial services industry. Each of these structures offers advantages over both the other proposals to federalize insurance and the current system of state regulation. The alternative structures are: (1) create a federal agency that would regulate insurance, securities, commodities and futures and would merge the Securities and Exchange Commission and the Commodities Futures Trading Commission into it; (2) create a twin peaks structure with two federal agencies that regulate all financial services but one agency would be responsible for regulating prudential risks and the other agency would be responsible for regulating market conduct risks and protecting consumers and investors; and (3) create a single, financial services regulator that would be responsible for regulating all aspects of financial services. These structures offer several advantages over the current structure and the proposals to federalize insurance, because, among other things, they would better reflect how the financial services industry operates than the existing structure, would reduce the total number of agencies regulating financial services, and would reduce the problem of agency capture. If the United States is going to federalize insurance, it should adopt a structure that recognizes the current realties of the financial services industry and not one that memorializes how the industry operated decades ago.

insurance reform, regulation, optional federal chartering

Abstract:
In November 2007, the U.S. Conference of Catholic Bishops issued "Forming Consciences for Faithful Citizenship - A Call to Political Responsibility from the Catholic Bishops of the United States." This statement by the American Catholic Bishops provides guidance to Catholic voters on how to execute their responsibilities in accord with Catholic social teaching.

Despite some flaws, "Forming Consciences" has three major virtues that will aid American Catholics as they try to vote in good conscience. First, it reaffirms the need for American Catholics become more familiar with and to apply the broad range of Catholic social teachings when voting and exercising their other civic duties. Second, it explicitly rejects the notion that Catholics should be single issue voters. Third, Forming Consciences encourages, but certainly does not require, American Catholics to adopt a holistic ethical approach when evaluating candidates and issues. Such a holistic approach tends to provide better solutions, certainly on economic and environmental issues, than the narrow definition of issues and problems currently used in politics.

This essay comments on how useful the document is in actually helping the average American Catholic, who is not already an expert in Catholic social teachings, discern how to vote. As part of this assessment, it focuses on how much weight Catholics should give to economic and environmental issues based upon the guidance provided by the Bishops' statement. These issues were chosen because they are growing areas of concern both for Americans and for the Vatican.

This essay was written for the Journal of Catholic Legal Studies Symposium issue on "Forming Consciences for Faithful Citizenship - A Call to Political Responsibility from the Catholic Bishops of the United States."

Presidential Election, Catholic Social Teaching, Economics, Environment, Global Warming, Climate Change

Abstract:
If imitation is the highest form of flattery, the United States may feel very flattered by the fact that other nations have modeled many of their regulations governing financial services (securities, banking, and insurance) on U.S. regulations. In fact, the United States government and the American Bar Association have been encouraging other nations to copy the way that the United States regulates financial services for over two decades. Some nations have not only adopted laws and regulations similar to U.S. financial regulations but have enacted legal reforms to permit lawsuits similar to U.S. class actions.

No other nation, however, has sought to copy the federal and state regulatory structure that the United States uses to supervise and regulate financial services. The United States has over 115 federal and state agencies involved in regulating some aspect of financial services and Congress is contemplating adding new agencies to the list.

In fact, the rest of the world is moving in the other direction. Over the past decade fifty nations have consolidated their financial services regulators and sixteen nations, including the United Kingdom, Germany and Japan, have created single financial services agencies. When consolidating their regulators, these nations have streamlined the regulatory procedures and eliminated outdated or duplicative regulations. For example, the UK Financial Services Authority reduced the listing rules for new securities by 40 percent. As a result, these streamlined regulatory structures have given these countries a competitive advantage over the United States.

This article explores how the United States regulatory structure is undermining U.S. competitiveness in the area of financial services. This article examines why the U.S. regulatory structure hinders U.S. competitiveness more than any particular law, such as the Sarbanes-Oxley Act. The article also discusses what actions federal and state regulators could take to minimize the problems created by the current structure and to move towards a more consolidated or integrated regulatory framework.

financial services, financial regulation, U.S. competitiveness, securities, banking, insurance

Abstract:
The Federal Organizational Sentencing Guidelines, the Sarbanes-Oxley Act and other laws and regulations encouraged U.S. corporations to adopt codes of conduct and compliance programs. Usually these laws and regulations offer corporations lower penalties if they adopted codes of conduct and compliance programs to encourage them to engage in self-policing.

These efforts seemed to have failed in the case of Enron. As a result, Congress enacted the Sarbanes-Oxley Act that changed the dynamic by requiring public corporations to disclose if they had a code of conduct and if not, why not. The Sarbanes-Oxley Act assumed that the market would punish corporations that failed to adopt codes of conduct with lower prices for their stock. Many U.S. corporations have adopted corporate codes of conduct because of the incentives built into the Organizational Sentencing Guidelines, the Sarbanes-Oxley Act and other laws.

Most of the existing codes of conduct, however, merely require businesses to comply with their present legal obligations. U.S. corporations are reluctant to adopt codes of conduct that contain aspirational goals that exceed their legal requirements, because of concerns that the failure to achieve the aspirational goals set forth in these codes of conduct would make the corporations targets for litigation and because the added costs might make them less competitive than businesses that do not adopt such policies and procedures.

This article examines the ways in which the law shapes what rules and procedures go into codes of conduct. It suggests a way of creating a safe harbor for codes of conduct that espouse aspirational goals that would overcome or minimize the legal disincentives to adopting aspirational goals in business codes of conduct. Finally, it will analyze why enacting this safe harbor would, on balance, be beneficial to the businesses involved and to society as a whole.

codes of conduct, codes of ethics, social responsibility, corporate governance

Abstract:
Western experts have extensively counseled East European constitution drafters regarding the dangers of including various social and economic rights within their constitutions. These advisors often criticize provisions that guarantee a right to a clean environment or make the protection of the environment a duty of the state. Such provisions are condemned as holdovers from the old communist constitutions and are branded as unenforceable or as luxuries that the bankrupt economies of Eastern Europe cannot afford. Each of these arguments has some grounds for support.

However, the environmental provisions within East European constitutions could be both enforceable and effective if the drafters applied the lessons learned from 20 years of experience under U.S. state constitutions' environmental provisions. More than 30 U.S. states have constitutional provisions that deal with either the environment or specific natural resources. The successes and failures of these state constitutions' environmental provisions suggest how to draft such provisions to be self-executing and enforceable.

The East Europeans should implement enforceable environmental laws, both constitutional and statutory; for them, environmental protection is a necessity, not a luxury. Eastern Europe is an environmental disaster area. Forty-five years of communism resulted in lives significantly shortened by exposure to pollution, forests destroyed by acid rain, waters polluted with industrial waste and sewage, and air unbreathable in many places.

The transformation of Eastern Europe's economies to capitalism will have a significant impact on the environment, unless Eastern Europe undertakes sustainable development. The right mix of policies and assistance will promote economic growth while protecting and cleaning up the environment. Unfortunately, much of the current advice and aid to Eastern Europe fails to accomplish either. As Dr. Karolyi Kiss, a leading economist at the Institute for World Economics in Hungary, commented, [w]hat we would really like is for just one Western country to step forward as a patron saint of sustainable development.

Eastern Europe, Environmental Law, Constitution

Abstract:
The development of international norms for insurance has not progressed as far or as deeply as the development of international norms for banking. Several factors have affected this process. First, the efforts to develop such norms are relatively new. The International Association of Insurance Supervisors (“IAIS”) has existed for less than fifteen years while the Basel Committee on Banking Supervision has existed for over thirty years. Second, the membership of the IAIS makes it harder for that organization to achieve consensus on principles and standards than for the Basel Committee. The IAIS has members from almost 140 nations, including both developed and less developed nations, while the Basel Committee is comprised of only thirteen members from only developed nations.

Finally, the fact that insurance is regulated by the states within the United States has hindered the ability of the United States to conduct effective international negotiations on insurance regulation. The individual states have not adopted uniform insurance laws. As a result, they do not necessarily espouse the same positions when participating in international bodies like the IAIS. In addition, the federal government has difficulty translating the soft law standards developed by the IAIS into hard law in treaties and international agreements because it currently lacks the power to force the states to change their insurance laws to conform to the negotiated standards. The states also cannot translate the soft law standards developed by the IAIS into hard international laws because they currently are not authorized to conduct negotiations for treaties or binding international agreements on insurance. Until the United States creates a body capable of conducting international negotiations that can bind the states, the development of international insurance standards will continue to proceed more slowly than the development of standards for other financial services sectors.

Insurance, International Law, International Norms, Insurance Regulation