Assessing the Effectiveness of U.S. Financial Regulations: A Comparative Analysis with E.U. Responses

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Johns Hopkins University
This paper assesses the effectiveness of US financial regulation in carrying out its intended purpose, namely, to adequately protect investors from industry abuse, insider advantages, and fraud. Reviewing recent financial crises, the role of the SEC, high profile Supreme Court cases, and legislation, such findings call into question the legitimacy of the financial system as a whole and is worrying due to Americans’ sheer reliance on banks and securities markets. Furthermore, this paper then compares the U.S. regulatory response with that of the E.U. as a result of the Global Financial Crisis and found that E.U. regulations are more clear, more potent, and more effective in handling and preventing financial crises. This paper uses statistical data, legislative analysis, and testimonial evidence to conclude that there are severe ways in which the US regulatory regime is lacking. Particularly, through vague laws that do not take proper measures to adequately protect against a future crisis, along with the evaluation of the capacity of the SEC to enforce the financial laws in question, US financial regulation does not effectively carry out its intended purpose.
Finance, Regulation, Government, S.E.C.