76082 US Regulation of Financial Institutions (UG)

To a surprising degree, financial institution regulation has been involved in major events of United States history and in the development of Constitutional theory. For example, perhaps the most significant piece of banking legislation, the National Bank Act, was adopted during the dark days of the Civil War by the Union in order to finance the prosecution of the war. Seminal constitutional issues are regularly played out against a financial institution background, for example, McCulloch v Maryland. The intertwining of history, politics and economics has resulted in a regulatory system of surprising complexity. Were one to diagram all the financial institution regulatory bodies and their authority, the result would resemble the extraordinary contraptions devised by the American cartoonist Rube Goldberg. Faced with such a diagram, Europeans, in particular, react with incredulity and suspect that they are the butt of what must be a joke. Despite its evident irrationality, the American system has generally worked in the banking area and, until recently, in the securities area. For the past 10–15 years, however, there has been increasing disquiet about the insurance industry.

With such an introduction, one might legitimately wonder what can be learned from the study of such a system. The subject is designed to provide an overview of the American regulatory system and to make five points. First, there is an ineluctable connection between politics and regulation. Perhaps, that connection may be more clearly perceived in the American context than elsewhere. Second, economic developments play a significant role in the development of regulatory systems. Third, political theory is of critical importance. Fourth, the American regulatory system is beginning to come to grips with the problem of an international economy in which the United States is a very significant player but only one of a group. The integration of the American regulatory system with similar systems in other nations will have a significant impact on all regulatory systems and, as well, on the success with which such systems deal with an ever-expanding global economy. Fifth, there are close economic ties between Australia and the United States as well as a shared history and shared aspirations. Just as there is significant American investment in Australia, there is, as well, significant investment moving from Australia to the United States, particularly in the area of intellectual property. In addition, many Australian companies raise funds in the US capital markets. Inevitably, these close ties are affected by the US regulatory system.

Accordingly, the subject has three significant subject matter aims: to develop an overview of the current US regulatory system; to focus on the strains in that system as it attempts to deal with a global economy, global markets and the ebb and flow of such international economic problems as the 'subprime crisis'; and the role of the regulatory lawyer and some of the skills which enable such a lawyer to provide counsel to clients as they deal not just with US Regulation of Financial Institutions, but also with any body of regulation, whether in Australia or the US, or elsewhere.

Thus, if successful in its aims, the subject also allows an Australian law student to achieve a deeper comprehension of the Australian regulatory system and its strengths and weaknesses by reason of the subject comparison of the Australian and US regulatory systems.

Typical availability

Spring semester, City campus