Managing Risk in the Financial System
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Managing Risk in the Financial System

Edited by John Raymond LaBrosse, Rodrigo Olivares-Caminal and Dalvinder Singh

Managing Risk in the Financial System makes important and timely contributions to our knowledge and understanding of banking law, financial institution restructuring and related considerations, through the production of an innovative, international and interdisciplinary set of contributions which link together the law and policy issues surrounding systemic risk and crisis management.
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Chapter 21: The US Architecture of Bank Regulation and Supervision: Recent Reforms in their Historical Context

Dalvinder Singh


Dalvinder Singh The US system of prudential regulation and supervision of banking is without doubt a complex structure – it is not centralized in a single regulator but is the responsibility of a number of separate and independent regulators. In the early periods of the financial crisis of 2007 a number of proposals were put forward for wholesale reform of the US regulatory system. These proposals were to improve the effectiveness of the regulatory structure and to simplify the financial regulatory structure overseeing the financial system in the post-Gramm-Leach-Bliley Act 1999 (GLB) world of large complex financial conglomerates. The proposals took the form of either a twin peaks model or a single regulator model.1 The debate about regulatory reform once again took centre stage during the recent financial crisis. This chapter explores some of the key features of the DoddFrank Act 2010 and then reflects on the historical resistance to wholesale architectural reform of the system of regulation. It seems as though history has repeated itself and the status quo remains and we explore why that is the case given the severity of this financial crisis. 21.1. THE HISTORICAL MOVES TOWARDS REGULATORY CONSOLIDATION The move towards regulatory consolidation in the banking system dates back to the 1930s and continued intermittently into the 1990s.2 However, this has been unsuccessful due to the underlying confidence in the regulatory system that prevails, despite a number of misgivings. This issue was obviously heightened with the move in some quarters towards a singleregulator model governing the...

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