June 16, 2009
The Committee on Capital Markets Regulation, which is directed by Harvard Law School Professor Hal Scott, has released a comprehensive report detailing recommendations to reform the U.S. financial regulatory structure. The report is entitled, “The Global Financial Crisis: A Plan for Regulatory Reform.”
“The last year has taught us that when more than one agency is in charge, no single agency is responsible or accountable,” said Scott, who also directs the Program on International Financial Systems at HLS. “We’ve gone to great lengths to recommend the right structure that can keep pace with our dynamic markets, so we can move beyond this crisis and prevent the next one.”
The detailed plan for regulatory reform is the result of a year-long examination of global financial difficulties and the key deficiencies in the regulatory system. Based on their research, the Committee members believe that an effective system must achieve four objectives:
- Reduced systematic risk through more sensible and effective regulation.
- Increased disclosure to protect investors and stabilize the market.
- A unified regulatory system where lines of accountability are clear and transparency is improved.
- International regulatory harmonization and cooperation.
The 57 recommendations contained in the plan address these shortcomings with proposals to reform capital requirements, create resolution procedures, and other regulation for non-bank financial institutions, increase transparency and supervision around sophisticated financial instruments, and improve accounting standards.
The Committee on Capital Markets Regulation is a non-partisan research organization dedicated to improving the regulation and transparency of U.S. capital markets. Along with Scott, the other co-chairs of the committee are Glenn Hubbard, dean of Columbia Business School, and John L. Thornton, chairman of the Brookings Institution. The committee’s 25 members represent a broad and diverse group of leaders in finance, business, academia, law, accounting, and the investor community.
Several current HLS students contributed to the research effort for the report, including four students who were senior research associates: Oscar Hackett ’09, A. Maxwell Jenkins ’11, Helen Lu ’11, and Yesha Yadav LL.M. ’09. Yuli Wang LL.M. '09 was also a contributor to the report. Other students who conducted research for the report are: Jonathan Bressler ’10, Caitlin A. Donovan ’11, Nathaniel A. Fischer ’10, Jeremy C. Kress ’10, Tsz Hin Kwok ’11, Alexander Levi ’10, Michael Lloyd ’10, Ephraim Mernick ’11, Deena Quitman ’10, Chris Theodoridis ’10, Jessica Vu ’10, and Yu Wakae LL.M. ’09.