Skip to main content
Download:
Events •

Wasting a Crisis: Why Securities Regulation Fails

The recent financial crisis led to sweeping reforms that inspired countless references to the New Deal. Comparable to the New Deal in both scope and scale, the 2,300-page Dodd-Frank Act of 2010 also shared with New Deal reforms the assumption that the cause of the crisis was misbehavior by securities market participants, exacerbated by lax regulatory oversight. With Wasting a Crisis, Paul G. Mahoney shows that this narrative is formulated by political actors hoping to deflect blame from prior policy errors. Mahoney moves beyond this received wisdom, showing that lax regulation was not a substantial cause of the Great Depression. As new regulations were formed around this narrative, not only were the majority largely ineffective, they were also often counterproductive, consolidating market share in the hands of leading financial firms. An overview of 21st-century securities reforms from the same analytic perspective, including Dodd-Frank and the Sarbanes-Oxley Act of 2002, shows a similar pattern and suggests that they too may offer little benefit to investors and some measurable harm.