Law Commons^™

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

Cornell Law Review

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 various approaches …