E Pluribus Unum - Out of Many, One: Why the United States Needs a Single Financial Services Agency

Abstract

The United States needs to consolidate the over 115 existing state and federal agencies that regulate banking, securities and insurance firms and their products and services into a single financial services regulator, a U.S. Financial Services Agency (US FSA). The US FSA would be able to regulate more effectively the U.S. financial services industry than the existing regulatory regime. The current U.S. financial regulatory regime suffers from a range of problems, including an inability to anticipate and plan for future financial crises, an inability by regulators to quickly adapt to market innovations and developments, inconsistent regulations for financial products and firms that are competitors in the market, and the capture of agencies focused on a single sector of the financial services industry by the firms that they regulate. In addition, the U.S. financial regulatory regime is one of the most expensive in the world, costing 12 times more than the United Kingdom's regime and 86 times more than Germany's regime. The US FSA would eliminate or significantly reduce these problems as well as provide more cost effective and transparent regulation of the financial services industry than is available under the current system.

Keywords: Single financial regulator, financial services, banking, securities, insurance, regulation

JEL Classification: G20, G21, G22, G24, G28, H11, H59, H72, H73, K00