Regulating the Regulators

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.

MattY points us to a Gillian Tett column in the Financial Times, which ends with this:

If regulators and politicians are to have any hope of building a more effective financial system in future, it is crucial that they start thinking more about power structures, vested interests and social silence. That might sound like an irritatingly abstract or pious plea. However, it has some very practical implications about how policy is formulated. I will seek to flesh out some of those in next week’s column….

This is a surprisingly underdiscussed point, but it’s something that’s critical to how we think about financial regulation.  If we want regulation to work, the regulatory structures need to be set up so that their institutional power bases push them in the direction we want them pushed.  That’s why, for example, I don’t like the idea of the Fed gaining more power over consumer regulation: it’s institutionally and culturally oriented toward the financial community and macroeconomic management.  Consumer regulation will never be taken seriously there no matter how many laws we write.

I’m not sure if this means that an entirely separate agency needs to be set up or not, but whatever we do has to take account of how power actually works.  Not only does consumer financial regulation need to be in the hands of someone who considers it their prime responsibility, but it needs to have committee support in Congress and some kind of natural constituency with serious political juice and a financial interest in making sure consumer regulation works.  Otherwise it will sink into bureaucratic oblivion.  Suggestions welcome.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate