How the Obama Administration should Regulate the Financial Sector

Abstract:     
The Obama Administration will be looking to the financial regulatory apparatus to prevent future economic crises like the one the country is experiencing right now. This is a very ambitious objective to impose on any regulator. Much ink has been spilled in addressing how the financial regulatory apparatus should be constructed going forward. The focus has been on consolidating the multiple agencies with overlapping jurisdictions that oversee the financial services industry. Whatever their final form, we can identify certain key attributes these ultimate financial regulators should have to give them at least some hope of doing the proactive, forward-looking thinking the Administration will need them to perform: the right people at the agencies, enough access to the institutions they regulate, enough information from those institutions to know what is happening, an internal brain trust to analyze and assess that information, and a rapid reaction team to respond to financial emergencies.

Keywords: Banking Regulation, Financial Regulation

JEL Classifications: K22, K23, G21, G28

Working Paper Series