International Finance Regulation: The Quest for Financial Stability

CHAPTER 4 Global Financial Regulation: The Institutional Complexities

“Every administrative agency that has put out a broad rule has had to cut it back, sometimes cutting it back 50 percent or more. The agencies are not only paralyzed, they are inundated. They are unable to meet the pace set by Congress. Beyond that, they are extremely risk averse right now. They are focusing on the trivia rather than the broader issues.”

—Columbia Law School Professor John Coffee

In his message to JPMorgan Chase shareholders, its chairman and CEO, Jamie Dimon, mapped in 2011 the regulatory web his bank is subject to, emphasizing the impossible and ineffective complexity (see Figure 4.1).

A robust financial system needs coordinated and consistent regulation that is strong, simple and transparent. The regulators should have clear authority and responsibility. Just one look at the chart on the next page (Figure 4.1) shows that this is not what we now have. Complexity and confusion should have been alleviated, not compounded.¹

FIGURE 4.1 Regulatory Institutional Complexity—JPMorgan 2011 Annual Report

Did he ever expect that JPMorgan Chase would be buried under massive fines from several of those institutions?

At a global level, few attempts were made to discuss regulation at a global level prior to the 2008 crisis. The Bank for International Settlements (BIS) publishes a list of regulators ...