Details

Autor(en) / Beteiligte

• COATES, JOHN C.

Titel

Cost-Benefit Analysis of Financial Regulation: Case Studies and Implications

Ist Teil von

• The Yale law journal, 2015-01, Vol.124 (4), p.882-1011

Ort / Verlag

New Haven: The Yale Law Journal Company, Inc

Erscheinungsjahr

2015

Quelle

Business Source Ultimate【Trial: -2024/12/31】【Remote access available】

Beschreibungen/Notizen

• Some members of Congress, the D.C. Circuit, and the legal academy are promoting a particular, abstract form of cost-benefit analysis for financial regulation: judicially enforced quantification. How would CBA work in practice, if applied to specific, important, representative rules, and what is the alternative? Detailed case studies of six rules—(1) disclosure rules under Sarbanes-Oxley section 404; (2) the SECs mutual fund governance reforms; (3) Basel Ill's heightened capital requirements for banks; (4) the Volcker Rule; (5) the SEC's crossborder swap proposals; and (6) the FSA's mortgage reforms—show that precise, reliable, quantified CBA remains unfeasible. Quantified CBA of such rules can be no more than "guesstimated," as it entails (a) causal inferences that are unreliable under standard regulatory conditions; (b) the use of problematic data; and/or (c) the same contestable, assumption-sensitive macroeconomic and/or political modeling used to make monetary policy, which even CBA advocates would exempt from CBA laws. Expert judgment remains an inevitable part of what advocates label "gold-standard" quantified CBA, because finance is central to the economy, is social and political, and is non-stationary. Judicial review of quantified CBA can be expected to do more to camouflage discretionary choices than to discipline agencies or promote democracy.