Many thanks to our guest bloggers Cristie Ford, Erik Gerding, Brett McDonnell, Saule Omarova, and Dan Schwarcz for what has been a really amazing two day on-line forum. I’ve greatly benefitted from hearing their views on financial reform, and from the feedback on my own thoughts.
I notice that the original forum title had a question mark at the end – i.e. does financial reform need reforming? I ‘d say that our guests mostly feel the answer to that is yes. There was less agreement on exactly the nature of needed reforms.
Erik proposed some institutional redesign, soft countercyclical devices . . . and romance. There was some debate, prompted by Dan, about whether the political economy of financial regulation is fundamentally different from that of other issue areas. Cristie and Erik had some debate on the possibility of “making capture work,” with Cristie rejecting cozy club government in favor of a compliance-oriented approach that structurally forces transparency and broader participation. Saule proposes the statutory creation of a systemic risk PIG to impose structural checks on capture. And Brett proposed (and argued that Dodd-Frank already contained) a variety of smoothing mechanisms to help address procyclical patterns of financial regulation.
I didn’t propose any solutions, and simply remained content to provide some hard evidence about the activity of relevant actors – including industry, public interest groups, and the general public – with respect to the Volcker rule. I do continue to think that the answer has to begin with Congress. I complained from the start that some pieces of Dodd-Frank looked a lot to me like legislators seeking cover, with federal courts and agencies as the natural scapegoats if things went wrong down the road.
A sincere thanks to all of our guest bloggers for this forum! I couldn’t have asked for a better group to have this discussion with.
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