NCJ Number
126882
Journal
Washington and Lee Law Review Volume: 45 Issue: 4 Dated: (Fall 1988) Pages: 1275-1296
Date Published
1988
Length
22 pages
Annotation
This analysis of regulation of the financial services industry concludes that any increasing demand for regulation is the result of the changes in current regulations' effects on organized special interest groups rather than shifts in public opinion or voter ideology.
Abstract
An economic model of lawmaking shows that legislative and regulatory outcomes are best explained as the result of a market dynamic in which rival interest groups compete for legal rules that will transfer wealth from less organized groups and from the general public to themselves. Ideology and public opinion are involved in this interest-group dynamic, but they are subservient to the dominant role of competing special interest groups. Recent regulatory initiatives in the financial service industry underscore this point. These are the deregulatory trends in commercial banking, despite public-interest arguments favoring more regulation, and the move toward increasing regulations regarding insider trading of securities which are designed to obfuscate rather than clarify existing law. 91 footnotes