Wall Street as Community of Fate: Toward Financial Industry Self-Regulation

This Article proposes an approach to regulatory design that aims to create structural incentives for the emergence of a new model of embedded self-regulation in the financial industry. Without a doubt, the ideas laid out in this Article are more of a thought experiment than a polished set of fully developed regulatory proposals. These ideas and suggestions need a great deal of additional thought and a deeper, more granular and rigorous analysis of their potential consequences, benefits, and costs. Moreover, this Article explores only how to create conditions conducive to the emergence of comprehensive industry self-regulation that is embedded in the broader public interest and regulatory goals. It does not directly address what the ideal new model of financial industry self-regulation should look like or what mechanisms are needed to assure its effectiveness, legitimacy, and accountability. These critically important and highly complicated issues will require further research and analysis. The purpose of this Article is far more modest: to expand the boundaries of the debate on the future of global financial regulation and to start a serious discussion of all potential paths to reform, including the largely neglected and underexamined self-regulatory path