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New Directions in Financial Services Regulation$
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Roger B. Porter, Robert R. Glauber, and Thomas J. Healey

Print publication date: 2011

Print ISBN-13: 9780262015615

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262015615.001.0001

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Regulatory Structure and Reform: The Purpose Should Guide the Outcome

Regulatory Structure and Reform: The Purpose Should Guide the Outcome

(p.137) Regulatory Structure and Reform: The Purpose Should Guide the Outcome
New Directions in Financial Services Regulation

David G. Nason

The MIT Press

This chapter introduces the first signs that the United States is emerging from a period of failure of liquid markets such as markets for money-market mutual funds, for asset-backed commercial paper, and for auction-rate securities. It is the chapter’s view that this crisis and all its problems could not have been prevented by regulation alone. Instead, a more robust regulatory framework with oversight responsibility for cross-market activities and a focus on systemic risk is what could have discovered and pre-empted the dangers on the economy. The chapter goes on to discuss a blueprint for a modernized financial regulatory structure that could help improve the mortgage-origination process and establish some federal presence in the insurance markets. This blueprint is aimed to address the regulatory problems of market stability, prudential supervision, and oversight of business conduct and consumer protection. It focuses on systemic risk in order to improve regulatory efficiency and allow competition on an economic basis.

Keywords:   money-market mutual funds, asset-backed commercial paper, auction-rate securities, modernized financial regulatory structure, mortgage-origination, prudential supervision, market stability

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