The Consolidation of Financial Regulation: Pros, Cons, and Implications for the United States by Sabrina R. Pellerin, John R. Walter, and Patricia E. Wescott
Several countries have moved toward a more consolidated financial regulatory regime, and many economists and policymakers favor doing the same in the United States. Vesting a smaller number of agencies with more regulatory power could provide benefits, such as increasing information sharing and public accountability while reducing duplication of duties. But there are costs as well, argue Sabrina R. Pellerin, John R. Walter, and Patricia E. Wescott. For instance, greater consolidation could lead to a lack of regulatory competition, fewer new ideas, and less specialization. The authors conclude that there are “strong tensions between achieving the benefits of consolidation and preventing the costs that might arise from a lack of competition when there is only one regulator.”
You can find the full text of this article and others in the latest issue of Economic Quarterly.
Also in the Spring 2009 issue:
The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. For free copies or more information, contact the Federal Reserve Bank of Richmond’s Public Affairs office at (804) 697-7982.
The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.