Monday, January 21, 2008
New York Governor Eliot Spitzer has joined the chorus advocating "principles-based regulation" as a cure for what ails the financial services industry. On Jan. 18, the Governor hosted the first meeting of the Commission to Modernize the Regulation of Financial Services, where a proposal to institute principles-based regulation was discussed. According to the press release:
New York’s financial services market has been burdened by current regulations – a litany of detailed rules that are ineffective at achieving consumer protection. The United Kingdom and other international markets are moving to principle-based regulation, which focuses on broad guidelines. Some companies and consumers are concerned this may mean diminished compliance with specific rules, but the new principles-guided approach preserves relevant rules, while asking regulators and companies to focus on achieving desired outcomes. The result will be healthy markets and strong consumer protection without unneeded burdens.
The Commission will also consider a single state regulator for all financial services; instituting a risk-based approach to regulation; and eliminating out-of-date rules that are unnecessarily burdensome.
According to Governor Spitzer, “Modernizing regulation of financial services is first and foremost about keeping New York the financial capital of the world.”