Regulation Tracker

The big news on the regulatory front last week was the Wall Street Journal’s revelation that the Federal Reserve will give its regulators the ability to reject any pay package for any bank employee that encourages excessive risk-taking.

Draft legislation that would impose a uniform fiduciary standard on brokers and advisers, eliminate mandatory arbitration of brokerage disputes, and enhance the SEC’s authority to impose sanctions on and seek remedies from individuals who violated the securities laws but who are no longer associated with a regulated firm has been circulated by Rep. Paul Kanjorski, Chair of the House Subcommittee on Capital Markets.

Over at the Financial Post, Jagadeesh Gokhale and Peter Van Doren meet calls for tighter regulation of financial institutions with the argument that tighter regulation won't make things better, it will make things worse. I've heard many argue that financial institution deregulation following adoption of the Gramm-Leach-Bliley Act a decade ago, coupled with the Federal Reserve Board's policy of keeping interest rates low, caused the current crisis or at the very least, were the major fuels that caused it to burn as fiercely as it has. Gokhale and Van Doren disagree.