Discuss the case for a "super-regulator" in the context of what you have learned about "regulatory competition."
What will be an ideal response?
Regulatory competition describes the current situation in which banks can effectively choose their regulators by choosing whether to be a state or national bank and whether or not to belong to the Federal Reserve System. If one regulator allows an activity that another prohibits, a bank's managers can threaten to switch, or argue that a competitor who answers to a more permissive regulator has an unfair advantage. This has two consequences: first, regulators force each other to innovate, improving the quality of the regulations they writing. This is a positive outcome because it ensures that regulators and banks follow current best practice. But there is also a less desirable outcome in that bank managers can "shop" for the most lenient regulator. This was compounded in the 1990s when Congress removed the functional (and geographic) barriers that one separated commercial banking from other forms of financial intermediation (and which had outlawed interstate branching). It is likely that in the future regulators and supervisors will have no choice but to combine forces, either cooperating or merging, and the creation of a "super-regulator" would have the advantage of making the process more uniform and coherent.
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Exporting nations often agree to voluntary export restraints in an attempt to
A) decrease inflation. B) increase global welfare. C) avoid more restrictive trade policies. D) employ more workers in the importing nation.
Pricing insurance policies is made difficult because buyers have more information than sellers. This difficulty is an example of
A) adverse selection. B) asymmetric information. C) the free-rider problem. D) moral hazard.
One of the outcomes of the Uruguay Round is the formation of the World Trade Organization now sets new trade rules and has more power than the old GATT to enforce the rules it sets
Indicate whether the statement is true or false
Everything else held constant, Americans who love French wine benefit most from
A) a decrease in the dollar price of euros. B) an increase in the dollar price of euros. C) a constant dollar price for euros. D) a ban on imports from Europe.