RegTech and Predictive Lawmaking: Closing the RegLag between Prospective Regulated Activity and Regulation

61 Pages Posted: 21 Sep 2020 Last revised: 5 Oct 2020

See all articles by John W. Bagby

John W. Bagby

Pennsylvania State University

Nizan Geslevich Packin

City University of NY, Baruch College, Zicklin School of Business; City University of New York - Department of Law

Date Written: August 2, 2020

Abstract

Regulation chronically suffers significant delay starting at the detectable initiation of a “regulable activity” and culminating at effective regulatory response. Regulator reaction is impeded by various impediments: (i) confusion in optimal level, form and choice of regulatory agency, (ii) political resistance to creating new regulatory agencies, (iii) lack of statutory authorization to address particular novel problems, (iv) jurisdictional competition among regulators, (v) Congressional disinclination to regulate given political conditions, and (vi) a lack of expertise, both substantive and procedurally, to deploy successful counter-measures. Delay is rooted in several stubborn institutions, including libertarian ideals permeating both the U.S. legal system and the polity, constitutional constraints on exercise of governmental powers, chronic resource constraints including underfunding, and agency technical incapacities. Therefore, regulatory prospecting to identify regulable activity often lags the suspicion of future regulable activity or its first discernable appearance.

This article develops the regulatory lag theory (RegLag), reviews regulatory technologies (RegTech) that show promise in narrowing the RegLag gap, and proposes programs to improve regulatory agency clairvoyance to more aggressively adapt to changing regulable activities, such as by using anticipatory approaches that show promise to narrow RegLag delays.

Keywords: FinTech, RegTech, Admin Law, Regulatory, Economics, Financial Regulation, Deregulation, technology, lag, delay, black box, diffusion, CFPB, SEC, FED, Dodd Frank

Suggested Citation

Bagby, John W. and Packin, Nizan Geslevich, RegTech and Predictive Lawmaking: Closing the RegLag between Prospective Regulated Activity and Regulation (August 2, 2020). Available at SSRN: https://ssrn.com/abstract=3665582 or http://dx.doi.org/10.2139/ssrn.3665582

John W. Bagby

Pennsylvania State University ( email )

P.O.Box 9
Green Ridge, MO MO 65332
United States

Nizan Geslevich Packin (Contact Author)

City University of NY, Baruch College, Zicklin School of Business ( email )

One Bernard Baruch Way
New York, NY 10010
United States

City University of New York - Department of Law ( email )

New York, NY
United States

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