As the global economic crisis continues, politicians and investors are escalating calls for new regulatory scrutiny of financial markets. After decades of a cat-and-mouse game between the industry and regulators, Wharton faculty say it is clear a dramatic overhaul of the United States' Depression-era regulatory system is needed. At the same time, they warn that meaningful reform will be enormously complex and require long and careful consideration, not a quick fix to appease voters looking to place blame for the meltdown.
Any new regulation, they say, must balance the need to provide transparency and protections for investors while also allowing financial markets to continue to innovate and generate the capital required for economic growth.
"This financial crisis is so serious, and clearly the mechanisms have broken down [to the extent] that we're really going to have to get more serious about regulation," says Wharton finance professor Richard Marston.
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