Academic

Regulatory Consolidation Goes Away in the UK

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

Henry Paulson urged the United States to rationalize its undoubtedly irrational regulatory system (which prompted Larry Cunningham and I to write an article modestly defending the American approach).  But the UK rationalized financial regulation during the Blair years, creating a single regulator of everything, the Financial Services Authority.  Of course, Britain had a financial crisis along with the United States, which may just show the limits of institutional design.

But the conclusion the Tories drew was that the FSA had to be split into separate regulators.  I wouldn't call it regulation American style, but it is something of a rebuke to proponents of centralization.  The winner of the turf fallout?  The Bank of England, which is now going to be both a central bank, and a supervisor, much like the Fed.

Full post as published by Conglomerate on June 17, 2010 (boomark / email).