Redesigning Regulation: The ~ u t k r e of Finance in the United States

This symposium on restructuring the financial system is both timely and important! There is a growing realization that the current system of financial regulation has broken down, and that a new system of financial regulation is needed. What should that new system be? Recently, a number of proposals for restructuring financial regulation have been made, and the pur-pose of this paper is to evaluate those proposals. Which redesign of regulation will enable the United States to achieve the aims of finan-cial regulation? This formulation of the problem is deliberate. The issue is not dereg-ulation or reregulation. Nor is the issue broader powers for banks. The issue is comprehensive restructuring of financial regulation. Before examining proposals for restructuring, it is necessary to describe why restructuring is necessary. This is done in the first sec-tion of the paper. The second section then analyzes current proposal