What Is Regulation, and What It Can and Can’t Do — In Theory and Practice

Up to this point, this book has been mostly concerned with explaining the market microstructure of securitization, especially in the context of the Global Financial Crisis. But now we need to address the previous regime’s failings and propose a more robust environment for securitization ‘in the public interest’. In the aftermath of almost absolute collapse of the global financial system, ‘[s]upposedly “autonomous” regulatory agencies have been accused of being asleep at the wheel, being exposed to hyper-politicisation, and being used as political tools of blame shifting’.1 As theory predicts, regulatory changes have therefore come thick and fast since the GFC. However, a debate continues to rage between the post-GFC exhortation for more and more formal regulatory control over the financial industry and the growing fear of the effects on eco-nomic growth and national competitiveness, the latter publicized especially by the financial industry in an attempt to roll back regulation or prevent new restrictions.