The Institutional Framework for Cost Benefit Analysis in Financial Regulation: A Tale of Four Paradigms?

21 Pages Posted: 29 Aug 2014 Last revised: 12 Dec 2014

See all articles by Robert P. Bartlett

Robert P. Bartlett

University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy

Date Written: December 16, 2013

Abstract

This paper, written for a Conference on Cost-Benefit Analysis (CBA) of Financial Regulation held at the University of Chicago in October 2013, analyzes the institutional framework that has historically governed the CBA of financial regulation. Although U.S. financial regulators are often portrayed as being immune from CBA, the paper shows how each major regulator has historically used CBA under one of four distinct institutional paradigms. The existence of these distinct paradigms highlights that a formal CBA requirement need not lead to regulatory paralysis as opponents of CBA often contend, but the uneven application of CBA they engender provides reason to believe that this institutional framework is far from ideal. To the extent that the goal of CBA is to provide meaningful, transparent analysis of rule-making while avoiding regulatory paralysis, the paper argues in favor of moving toward a more uniform institutional framework for financial regulation. In particular, adopting a single CBA paradigm that requires interagency coordination but avoids judicial review provides the greatest promise for achieving this goal in financial regulation.

Keywords: Cost-Benefit Analysis, Financial Regulation, Dodd Frank, OIRA

JEL Classification: D02, D61, D73, D78, G18, G38, I3, K22, K23, L51

Suggested Citation

Bartlett, Robert P., The Institutional Framework for Cost Benefit Analysis in Financial Regulation: A Tale of Four Paradigms? (December 16, 2013). Journal of Legal Studies, Vol. 44, 2014. Available at SSRN: https://ssrn.com/abstract=2488077 or http://dx.doi.org/10.2139/ssrn.2488077

Robert P. Bartlett (Contact Author)

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States
510-642-6646 (Phone)

University of California, Berkeley - Berkeley Center for Law, Business and the Economy

UC Berkeley School of Law
Berkeley, CA 94720

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