The Sentinel: Improving the Governance of Financial Regulation

31 Pages Posted: 5 Nov 2009

See all articles by Ross Levine

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Date Written: November 2, 2009

Abstract

Financial regulators and politicians unsuccessfully maintained the safety and soundness of the U.S. financial system not only because they lacked the proper tools but also because they lacked the proper incentives. While filling regulatory gaps and improving supervisory tools are worthwhile reforms, they do not address the core governance failure - the unwillingness of the policy apparatus to adapt to a dynamic, innovating financial system and act in the best interests of the public. I propose an auxiliary institution to act as a sentinel on behalf of the public to improve the design, interpretation, and implementation of financial regulations.

Keywords: Financial Intermediation, Government Policy, Political Economy, Regulation, Crisis

JEL Classification: G28, H11, G18

Suggested Citation

Levine, Ross Eric, The Sentinel: Improving the Governance of Financial Regulation (November 2, 2009). Available at SSRN: https://ssrn.com/abstract=1498757 or http://dx.doi.org/10.2139/ssrn.1498757

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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