Financial Market Regulation Legislation and Implications
What role should regulation play in financial markets? What have been the ramifications of financial regulation? To answer these and other questions regarding the efficacy of legislation on financial markets, this book examines the impact of the Gramm Lea
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John A. Tatom Editor
Financial Market Regulation Legislation and Implications
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Editor John A. Tatom Networks Financial Institute Scott College of Business Indiana State University 800 Sycamore St. #601 Indianapolis, IN 47809, USA [email protected]
ISBN 978-1-4419-6636-0 e-ISBN 978-1-4419-6637-7 DOI 10.1007/978-1-4419-6637-7 Springer New York Dordrecht Heidelberg London © Networks Financial Institute, 2011 All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)
Preface
Financial regulatory reform has been critically important for several years. Even before the mortgage and financial crisis became apparent to most policymakers and analysts, Treasury Secretary Frank Paulson initiated, in spring 2007, a broad and sweeping review of financial regulation that was path breaking in its conceptual redesign. Moreover, the tenth anniversary of the passage of the Financial Modernization Act of 1999, also called the Gramm-Leach-Bliley Act (GLBA), at the time and perhaps still the most fundamental change in the nation’s financial structure since the Great Depression, is a natural watershed for the evaluation of the structure and its regulation. The inevitable review of federal regulation was reinforced by the mortgage and financial crisis of 2007–2009. Several leading financial economists and analysts saw the problems of flawed financial regulation, especially the GLBA, as the fundamental cause of the crisis and demanded its repeal. There were many regulatory changes in 2008–2010 because of the crisis and Congress passed the Wall Street Reform and Consumer Protection Act of 2010. Also called the Dodd-Frank Act, it was signed into law on July 21, 2010. The GLBA fundamentally changed the financial landscape in the United States and was the most sweeping financial legislation in 66 years. The GLBA allows the formation of financial holding companies that can offer an integrated set of commercial banking, securities, and insurance products. The tenth anniversary of such a sweeping change in the industry’s structure is a natural benchmark for assessing the effects of the law and for questioning whether changes are necessary in the working of this historic legislation. But the importance of this review is reinforced by a variety of proposals that have been made
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