Trust But Verify: Domestic Politics and International Coordination in U.S. Post-Crisis Financial Regulatory Policy

32 Pages Posted: 22 Aug 2017 Last revised: 12 Aug 2019

See all articles by Nicholas Kean Tabor

Nicholas Kean Tabor

Board of Governors of the Federal Reserve System

Date Written: August 20, 2017

Abstract

After the 2008 financial crisis, reforms to financial regulation in the United States developed with an apparent contradiction at their core: While those reforms embraced cooperative international measures, they simultaneously imposed more stringent safeguards on foreign banks opening on American soil. In short, they both ceded and guarded domestic control over U.S. financial regulatory policy. This Comment examines that contradiction from 2008 to 2010, including through Basel III negotiations and the Dodd–Frank Wall Street Reform and Consumer Protection Act, and attempts to explain the contradiction using an extended rational institutionalist account of international policy development. The domestic actors responsible for U.S. foreign financial policy held distinct preferences for financial reform; when one actor exerted greater control over an institutional locus of the reform process, that actor’s preferences dominated. The resulting legislation provides a clear demonstration of the explanatory power of domestic politics for international legal and policy outcomes — even in the absence of public attention. The views expressed in this article are the author’s alone and do not necessarily reflect the views of the Federal Reserve Board or the United States government.

Keywords: Dodd-Frank, Basel, Financial Regulation, Financial Reform, FATF, International Law

JEL Classification: F02, K20, K23, K33

Suggested Citation

Tabor, Nicholas, Trust But Verify: Domestic Politics and International Coordination in U.S. Post-Crisis Financial Regulatory Policy (August 20, 2017). 39 U. Pa. J. Int’l L. 889 (2018), Available at SSRN: https://ssrn.com/abstract=3022880 or http://dx.doi.org/10.2139/ssrn.3022880

Nicholas Tabor (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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