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Too Big To Supervise: The Rise Of Financial Conglomerates And The Decline Of Discretionary Oversight In Banking, Lev Menand

Faculty Scholarship

The authority of government officials to define and elimi­nate “unsafe and unsound” banking practices is one of the oldest and broadest powers in U.S. banking law. But this authority has been neglected in the recent literature, in part because of a movement in the 1990s to convert many supervi­sory judgments about “safety and soundness” into bright-line rules. This movement did not entirely do away with discre­tionary oversight, but it refocused supervisors on compliance, risk management, and governance – in other words, on inter­nal bank processes.

Drawing on the rules versus standards debate, this Arti­cle develops a taxonomy for parsing the …