This conference marked the beginning of a new set of initiatives, under the auspices of the Richard Paul Richman Center for Business, Law, and Public Policy, to bring together faculty at Columbia Business School and Columbia Law School for thoughtful and timely discussions on major issues in public policy. We convened this one-day conference on the topic of the unfinished business of financial regulatory reform to achieve two broad goals: (1) to take stock of the outcomes, so far, of the Dodd-Frank Act of 2010, and (2) to consider what additional or alternative reforms might be warranted.
Our first panel’s speakers reviewed important parts of the legislation, considered some of its shortcomings, and evaluated the progress on the new regulations. The discussion was wide-ranging. Much of the most contentious debate revolved around whether the new resolution authority created under Dodd-Frank would exacerbate or lessen the too-big-to-fail problem.
The following three panels considered new directions for reform. The second panel highlighted several ideas for improving the effectiveness of regulation, including proposals for restructuring banks’ capital requirements, the content of new “living wills” that banks will be required to prepare, and several other initiatives in the areas of prudential regulation, securities regulation, and corporate governance reforms.
The third panel considered the potential effects of structural change in the banking industry. The key issue is whether antitrust problems and too-big-to-fail protection warrant actions that would break up the largest banks, or at least measures that would promote competition and reduce the likelihood of bailouts. Some panelists favored structural change, while others focused on the benefits of large bank franchises and argued that breaking up these franchises would not eliminate bailout risks.
The final panel discussed the feasibility and desirability of cooperating with other countries in setting regulations and resolving the fates of failed financial institutions. Some speakers were skeptical of the advantages of such cooperation, while others saw potential benefits but recognized practical difficulties in shaping effective cross-border regulation and resolution authorities.
We believe the discussions at the conference made a contribution toward the difficult task of identifying and addressing the flaws in our financial system. The complete conference papers and slide decks, as well as video of the speakers’ presentations, are available on the Richman Center’s website.
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