Intrinsic Imbalance: The Impact of Income Disparity on Financial Regulation

As part of a symposium on the administrative law of financial regulation, this article shows that there is a two-to-one income disparity between members of the financial industry and their regulators. When this income disparity — which dwarfs that between other industries and their regulators — is coupled with the complexity of financial products and markets, it creates an information asymmetry that can lead to regulatory failure. Although scholars have long observed the existence of an information asymmetry between regulators and industry due to delays in obtaining information, this income disparity creates an additional, and very different, information asymmetry: one based not on obtaining but on processing information