Introduction: Regulation and the Level Playing Field

Abstract

To non-US observers of the US financial scene, Americans must seem to be preoccupied with regulation. Despite the often-repeated promise of deregulation, US financial markets remain the most heavily regulated in the world, and US scholars, legislators and even bankers continue to spend an enormous amount of time studying, analyzing and debating the efficiency and legitimacy of their own regulatory process. Yet despite the considerable amount of time and ink that has been devoted to explaining US financial regulatory structure, its contradictions remain as apparent, and as puzzling to outside observers, as ever. For example, for at least the last two decades, virtually every scholarly work on US financial regulation has begun with the assertion that US financial markets are undergoing a transition to deregulation. Yet, as anyone who has tried to navigate the waters of the US financial regulatory system is painfully aware, significant legal obstacles remain and may be ignored only at one’s peril. Although pundits predict that the passage of comprehensive financial reform legislation will rationalize the regulatory process, even a cursory examination of recent legislative action suggests that US financial reform may be leaving the regulatory waters as dangerous and as difficult to navigate as ever.