Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Saturday, May 15, 2010

Branson on SEC Enforcement

Trekking Toward Über Regulation: Prospects for Meaningful Change at SEC Enforcement?, by Douglas M. Branson, University of Pittsburgh School of Law, was recently posted on SSRN.  Here is the abstract:

Whether used in analysis of Senator Christopher Dodd’s, the administration’s, or anyone else’s regulatory reform proposals, a phrase often heard in Washington, D.C., is über regulation. Large, or very large, (über) regulators of banks and financial institutions are thought to be necessary for at least three reasons. First, large financial institutions (Goldman Sachs, Bank of America, Citigroup) need to counterbalanced with large, all powerful regulators. Second, broad (large) grants of subject matter jurisdiction are necessary to eliminate possibilities for regulatory arbitrage which currently exist (banks, for example, may be able to chose from among the Office of Comptroller of the Currency, the Federal Reserve, or various state’s departments of banking or financial institutions as their principal regulator). Third, only an über regulator would have the overview to detect and the powers to curb unacceptable levels of systemic risk which may lurk over the horizon from time to time. This article recounts some of those arguments, also documenting the downside of über regulation, such as loss of historic camaraderie and high morale in certain smaller regulatory agencies such as the SEC.

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