78116 US Regulation of Financial Institutions (PG)

To a surprising degree, financial institution regulation has been involved in major events of United States (US) history and in the development of US Constitutional theory. For example, perhaps the most significant piece of 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 such as, 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 or 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 study of such a system. The subject is designed to emphasise a number of critical points. First, there is an ineluctable connection between politics and regulation. That connection may be more clearly perceived in the American experience than in some other countries. 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 significant investment as well moving from Australia to the United States, particularly in the area of intellectual property. In addition, many Australian companies raise capital in the US capital markets.

Accordingly, the subject has three significant aims: first, to learn the current US regulatory system; second, 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 third, 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 the US, but any, regulatory system.

Thus, if successful in its aims, the subject will allow an Australian law student to have a deeper understanding of the Australian regulatory system and its strengths and weaknesses because of a comparison with the US regulatory system.

Typical availability

Spring semester, City campus