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Title:Background considerations to a regulation of the US financial system: third time a charm? Or strike three? PDF Logo
Authors:Kregel, Jan
Issue Date:2009
Series/Report no.:Working papers // The Levy Economics Institute 557
Abstract:U.S. financial regulation has traditionally made functional and institutional regulation roughly equivalent. However, the gradual shift away from Glass-Steagall and the introduction of the Financial Modernization Act (FMA) generated a disorderly mix of functions and products across institutions, creating regulatory gaps that contributed to the recent crisis. An analysis of this history suggests that a return to regulation by function or product would strengthen regulation. The FMA also made a choice in favor of financial holding companies over universal banks, but without recognizing that both types of structure require specific regulatory regimes. The paper reviews the specific regime that has been used by Germany in regulating its universal banks and suggests that a similar regime adapted to holding companies should be developed.
Subjects:Financial reregulation
Glass-Steagall
Financial Modernization Act
German universal bank regulation
prudential regulation
JEL:G21
G28
F33
F36
Document Type:Working Paper
Appears in Collections:Working Papers, Levy Economics Institute of Bard College

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