The Politics of Financial Regulation and the Regulation of Financial Politics

I have an new article, The Politics of Financial Regulation and the Regulation of Financial Politics, forthcoming in the Harvard Law Review. The article is a multi-book review essay that serves as a launching pad for a discussion about the role of politics in financial regulation. The basic point is that the real issue in financial regulation is one of neutralizing or harnessing politics. Without addressing the political problem in financial regulation, regulatory reforms will be incomplete and unsustainable.

Comments

[mt]

I would imagine the following statement (taken from your post with one word redacted) - "The basic point is that the real issue in _____ regulation is one of neutralizing or harnessing politics. Without addressing the political problem in _____ regulation, regulatory reforms will be incomplete and unsustainable." - is universally true. It is almost certainly the case that, once you eliminate politics from lawmaking, the law on the books would tend to be much less likely to change. It is hard to imagine, however, that a separation of lawmaking from politics is consistent with any school of U.S. Constitutional interpretation.

[Adam]

mt-

First, nice to see you've got a blog.

Second, I don't know how much sense it makes to debate the substance without the benefit of the article's context. Nonetheless...

Third, I am not advocating a separation of lawmaking from politics. One option, which no one in the US really seems to want, is more political control over financial regulation. We could take it back to the ballot box, like it was in the 19th century, but no one wants to see that.

Instead, I am suggesting that if we think there is such a thing as neutral policymaking, then we need to try to enable it, and what I do in the article is explore some of the options: leaning away from politics (CFPB design doubles down on agency independence) or leaning in to politics by trying to harness rent-seeking impulses to neutralize politics (Glass-Steagal accomplished for a while, and I have some other historical and recent examples).