Bankers, Bureaucrats, and Guardians: Toward Tripartism in Financial Services Regulation by ProQuest

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This article challenges the underlying concept of financial sector regulation as a process involving only two principals: the financial services industry and the government agencies overseeing it. This article offers a new vision of systemic risk regulation as a tripartite process. This Article advocates the statutory creation of a functional equivalent to such a public interest group: the Public Interest Council (Council). The Article is structured as follows. Part II defines the fundamental regulatory dilemma in the financial sector regulation after the crisis as the need to incorporate broader societal interests directly into the regulatory process. Part III briefly examines the notions of tripartism and public interest representation in academic debate. Part IV analyzes the elements of tripartism and tripartite arrangements that currently exist in various regulatory contexts and discusses their potential applicability in systemic risk regulation in the financial sector. Part V outlines the principal framework for the design and operation of the proposed Council.

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									Omarova post macro                                                                                             4/19/2012 4:29 PM




 Bankers, Bureaucrats, and Guardians: Toward Tripartism
             in Financial Services Regulation

                                             Saule T. Omarova*

I. INTRODUCTION ............................................................................................................ 622
II. REGULATORY CHALLENGES IN THE FINANCIAL SERVICES SECTOR ............................ 625
        A. Financial Regulation Reform After the Crisis: Systemic Risk and
           Regulatory Capture ......................................................................................... 625
             1. Systemic Risk Regulation ............................................................................ 625
             2. The Problem of Regulatory Capture ........................................................... 629
        B. Reframing the Dilemma: Systemic Risk Regulation as a Political Choice ....... 632
III. TRIPARTISM AND GUARDIANSHIP IN ACADEMIC DEBATE ......................................... 634
        A. Tripartism as a Counterweight to Regulatory Capture .................................... 635
        B. Grappling with Public Interest in the Debate on Financial Regulation
           Reform ............................................................................................................. 637
             1. Improving Governance of Financial Regulation ......................................... 637
             2. Broadening Regulators’ Intellectual Perspective ....................................... 639
IV. ELEMENTS OF TRIPARTISM IN PRACTICE: “QUASI-GUARDIANS” AT WORK .............. 642
        A. Public Interest Organizations .......................................................................... 643
             1. Functions and Activities .............................................................................. 643
             2. Potential Limitations ................................................................................... 646
        B. Government Actors: Proxy Advocates and Agency Monitors .......................... 648
             1. Proxy Advocates ..........................................................
								
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