The Consumerization of Financial Regulation

Author: Helen A. Garten
Publication: Washington University Law Quarterly

Abstract: As deregulation proceeds, consumer protection may become the sole remaining rationale for any ongoing government involvement in financial markets. Decades ago, in the name of safety and soundness, government regulators enforced legal barriers between banks, securities firms, and insurance companies. Now, as these barriers are being dismantled, the regulatory function is shifting as well, as regulators increasingly concentrate on fashioning consumer protection standards to govern the deregulated and diversified financial institution. A new rule of regulation is emerging:Regulatory intervention is necessary to the extent that financial institutions have the potential to deal unfairly with the public. Otherwise, market controls usually are adequate.

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