The Confidence Game: Manipulation of the Markets by Governmental Authorities

Transactions: The Tennessee Journal of Business Law, Forthcoming

University of Miami Legal Studies Research Paper No. 2009-32

9 Pages Posted: 10 Nov 2009

Date Written: September 14, 2009

Abstract

The global financial crisis renders visible and urgent a perennial (although often ignored) tension in financial regulation with respect to the extent to which governments should intervene to fix the financial markets. Because the maintenance of confidence is at the heart of much financial regulation, a massive lack of confidence seems to be a significant market or regulatory failure justifying governmental intervention. However, some governmental responses to the financial market crisis seem to treat the preservation of confidence in the markets (rather than the preservation of market integrity) as the fundamental concern of regulation. The paper argues that adopting emergency measures to manipulate the markets in the interests of improving confidence risks undermining the ability of regulators to control the behavior of financial institutions for the future in any meaningful way.

Suggested Citation

Bradley, Caroline M., The Confidence Game: Manipulation of the Markets by Governmental Authorities (September 14, 2009). Transactions: The Tennessee Journal of Business Law, Forthcoming; Transactions: The Tennessee Journal of Business Law, Forthcoming; University of Miami Legal Studies Research Paper No. 2009-32 . Available at SSRN: https://ssrn.com/abstract=1502897

Caroline M. Bradley (Contact Author)

University of Miami - School of Law ( email )

P.O. Box 248087
Coral Gables, FL 33146
United States
305-284-2082 (Phone)
305-284-6506 (Fax)

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