Finance Is In the Midst of a Regulatory Reform Quilting Bee

From: Real Clear Markets

By Hester Peirce

Washington, D.C., is in the midst of a regulatory reform quilting bee. Several different parties are gathering up regulatory reform ideas for potential inclusion in a reworked financial regulatory framework. The end result could be hideous, or it could be an elegant, effective, and efficient amalgamation of these disparate regulatory efforts. The key to getting the latter result is ensuring that each included contribution furthers our collective desire to see a stronger, safer financial system that serves the needs of individuals and businesses.

The Treasury has released the first of its reports on financial reform. That report, which primarily focuses on issues related to the regulation of banks and credit unions, suggests a wide array of changes. Perhaps more important than the specific reform proposals is the report’s focus on broader regulatory themes. Is it possible to trim the number of federal financial regulators—now in the double-digits—in a way that makes financial regulation cheaper and more effective? Is it possible to find ways to induce regulators to better work together on issues like Volcker Rule implementation, cybersecurity, and economic analysis? What structural changes can ensure that regulators are accountable for their decisions? Can regulations be made more flexible to ensure that small and less complex financial firms are not stifled by a web of inapt regulations?

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