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Taking Systemic Risk Seriously In Financial Regulation, Todd Henderson, James C. Spindler

Indiana Law Journal

Bank regulation failed in the run up to the financial crisis of2008, as it has numerous times in the course of U.S. history. This is despite the existence of traditional prudential regulation, such as capital adequacy mandates, reserve requirements, and bank examination, as well as more common legal remedies, such as tort and contract litigation. Unsurprisingly, in the wake of these failures, many reforms have been proposed, and some adopted, to try to reduce bank risk taking. These reforms include limiting bank size, requiring bank managers to be paid differently, restricting investment in high-risk financial products, and, of course, tightening …