Abstract
Response to Brett McDonnell, Dampening Financial Regulatory Cycles
A key assumption underlying most of the proposals Professor McDonnell analyzes is that rules could and should be optimally tailored to address a perceived regulatory problem. In fact, the assumption that stable and optimal rules are an adequate remedy in many ways supports and perpetuates financial regulatory cycles. A key role for scholarship in this context could be the evaluation of supplemental governance mechanisms that help the main regulatory framework adapt to constantly changing market environments, financial innovation, and the regulatory environment.
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