Abstract

http://ssrn.com/abstract=1300431
 
 

Citations (3)



 


 



A Pragmatic Approach to the Phased Consolidation of Financial Regulation in the United States


Howell E. Jackson


Harvard Law School

November 12, 2008

Harvard Public Law Working Paper No. 09-19

Abstract:     
This essay proposes a phased transformation of financial regulation in the United States to focus the Federal Reserve Board on oversight of market stability, including systemically important institutions throughout the financial services industry, and to assign all other regulatory functions, including routine supervision and consumer protection, to an independent consolidated agency.

I. The authority of the Federal Reserve Board to oversee financial market stability should be expanded to cover all sources of systemic risk in the financial services industry, should be structured to coordinate effectively with other supervisory agencies, and should be designed to allow for consistent, appropriate forms of intervention in response to systemic risks.

II. Even after the authority of the Federal Reserve Board has been expanded, the consolidation of other federal financial regulatory functions should proceed; the experience of other leading jurisdictions indicates that consolidated supervision offer numerous benefits in terms of the quality and completeness of financial regulation and that the principal objections to consolidated supervision can be met through statutory safeguards and institutional design.

III: Experience in other leading jurisdictions also demonstrates that many of the benefits of consolidated oversight can be achieved without the statutory consolidation of front-line supervisory units and the world's premiere consolidated agency, the British FSA, was established in a multi-stage process whereby the enactment and implementation of new substantive statutes did not occur until the FSA has been in operations for several years.

IV. Drawing on these experiences, U.S. regulatory consolidation should follow a four-stage process: 1) immediate enhancement of the President's Working Group on Financial Markets; 2) prompt enactment of legislation creating an independent United States Financial Services Authority (USFSA or Authority) to provide industry-wide oversight, coordinate existing regulatory structures, and lay the groundwork for combination of existing supervisory agencies; 3) a second round of legislation authorizing the merger into the USFSA all other federal supervisory agencies; and 4) resolution of the organizational structure of the Authority should be postponed until regulatory consolidation is complete.

V. This four-phase approach to regulatory consolidation improves the likelihood of successful transition by delaying controversial decisions, avoiding unnecessary steps, and providing an organizational structure that can lead reform while safeguarding continuity of supervision.

VI. The creation of a United States Financial Services Authority is also consistent with expansion of the Federal Reserve Board's role in overseeing market stability and would actually improve the capacity of the Board to perform that function effectively.

Number of Pages in PDF File: 64

Keywords: Financial Regulation, Financial Institutions, Systemic Risk, Consolidated Supervision

JEL Classification: G01, G1, G18, G2, G21, G22, G24, G28, G38, K23, L5

working papers series


Download This Paper

Date posted: November 13, 2008 ; Last revised: September 24, 2013

Suggested Citation

Jackson, Howell E., A Pragmatic Approach to the Phased Consolidation of Financial Regulation in the United States (November 12, 2008). Harvard Public Law Working Paper No. 09-19. Available at SSRN: http://ssrn.com/abstract=1300431 or http://dx.doi.org/10.2139/ssrn.1300431

Contact Information

Howell Edmunds Jackson (Contact Author)
Harvard Law School ( email )
Griswald 402
1563 Massachusetts Avenue
Cambridge, MA 02138
United States
617-495-5466 (Phone)
617-495-5156 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 3,469
Downloads: 880
Download Rank: 13,582
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.297 seconds