PEW Trust summary report on regulatory models


The PEW economic policy department task force report suggests we take a better look at other models of regulation, perhaps to Australia.

In this short paper we look at the structure of international financial regulation in teh context of their response to the crisis in order to see what lessons there may be for the US. This is a summary not a detailed research effort, but we believe that even a summary effort could be helpful in order to dispel the idea that the experience of other countries makes it a waste of time to attempt substantial consolidation of regulatory agencies in the US.

The most important factor in determining the response of the different systems to the crisis is whether or not regulators were actively involved in making sure that their institutions, especially large institutions, were not taking excessive risks and speculating in risky assets. The particular designs of the regulatory systems do not show a clear enough pattern to make a definitive case for one specific approach. However, all of the countries described here undertook programs of regulatory consolidation in recent years in response to the changing nature of their financial sectors. Having a fragmented regulatory system did not strike any country as a particularly good idea…

As the G-20 makes announcements and the WTO actually makes rules with teeth, we shall see how this plays out on the global front as well, where the big action also takes place.