Regulation of the Financial Services Industry: Whose Money is at Risk?

Abstract

The financial crisis will result in far-reaching reform of the regulatory system affecting the U.S. financial services industry, financial markets, and government interactions with the markets. This Article considers the effect that regulatory reform will have on the regulation of retirement savings accounts, which have been devastated by market losses. In the financial services arena, reformers have evaluated the approaches used by the United Kingdom and Australia as potential paradigms for the U.S. but have failed to consider the way those countries integrate regulation across various types of investment accounts. The current system of retirement savings regulation in the U.S. is as much a historical anachronism as is the regulation of the financial services industry and markets. Although reformers recognize the fragmentation of regulatory authority, and the problems with that fragmentation, that has developed for financial services regulation, reform proposals fail to recognize the fractured nature of regulation of retirement savings accounts. The unique contributions of this Article are (1) to explain why financial services reform must recognize and address the regulation of retirement savings accounts, and (2) to suggest principles on which to base the division of regulatory authority.