This note discusses how U.S. legislators can address the difficult problem of choosing between different ways of dividing up the responsibilities of federal financial regulatory agencies.
The analysis suggests that:
- regulation by objective is an attractive approach for the United States going forward;
- if, as seems likely, no "pure" approach will actually be adopted, then the eleven principles applied here can act as a useful checklist for spotting places where ongoing inter-agency cooperation and Congressional scrutiny should perhaps be especially intense.
The note is divided into four sections:
- the first looks at four different approaches that have been widely discussed and advocated as ways of achieving completeness, consistency and efficiency;
- the second enumerates eleven principles that could be used to gauge whether specific divisions of responsibility between agencies are sound or not;
- the third uses the principles to evaluate the four approaches; and
- the final section concludes with some examples of how these principles can be applied usefully when political constraints are taken into account.
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