Regulation, Regulators, and the Crisis of Law and Government

This programme will examine the regulatory system in the wake of the global financial crisis, assessing its current weaknesses, the role of legislative and judicial bodies, and identifying measures for future reform of both markets and regulatory regimes.

Since the near total collapse of financial markets worldwide, there has been increasing public pressure for political representatives to address the risks and weaknesses evident in the capital markets. The common reaction of government is to pass more laws, impose more regulation, and create more regulatory agencies. Authority is delegated to regulatory officials, who typically have wide discretionary powers to decide what is in the public interest, depite remaining unanswerable to the people directly or through the institutions of civil society.

And yet much of the world financial crisis has been brought about in part by the failure of regulators, too often out-gunned and sometimes captive of the very industries they are meant to regulate. As Gretchen Morgenson argued recently in the New York Times, rather than creating more laws and increasing the power of those regulators who failed previously, we should instead be asking how we hold regulators accountable when they perform as badly as they did in recent years. 

In this programme of study, we intend to address a number of questions relating to this apparent lack of accountability in the regulatory system, such as:
 
(i)    Causes: what is the explanation for the renewed faith in big government?;

(ii)    Appointment: how are regulatory officials appointed and what principles do or should govern their appointment? What are the consequences for constitutional government of the mode of appointment?;

(iii)    Quality: how do we test the quality of regulation; that is, what are the standards of effectiveness and efficiency in evaluating regulation, and who sets the standards?;

(iv)    Accountability: in what ways and to whom (legislature, executive, courts, the people) are regulators accountable?;

(v)     Remedies and recourse: what remedies and forms of recourse are available for poor performance by regulators?;

(vi)    The People: where do the people feature in regulatory structures, and what constitutional standards can the people invoke in relation to regulatory government?;

(vii)    Courts: what role do the courts have in relation to regulatory government; does their role vary from one society to another; and could the courts have a fuller role in scrutinizing regulatory government?

This programme aims to shed light on these and other questions concerning the current state of the regulatory system, in order to reach some conclusions regarding the best approach to be taken in the years ahead.