#Regulatory capture plus#

Wachter, вЂњState and Local Anti-Predatory Lending Laws: The Effect of Legal Enforcement MechanismsвЂќ, Journal of Economics and Business, Vol. McCoy, Anthony Pennington-Cross and Susan M. Bostic, Souphala Chomsisengphet, Kathleen C.

#Regulatory capture plus#

The Home Ownership and Equity Protection Act 1994 defined high-cost loans as loans where the annual percentage rate at consummation exceeds the yield on the comparable Treasury security plus 8 per cent for first-lien loans and 10 per cent for junior-lien loans, or where the total points and fees exceed the greater of 8 per cent of the total loan amount or US $400 (subject to annual indexing). 198.ДЇigures on finance companies are from Lindgren et al., note 3, p. Steven Radelet and Jeffery Sachs, вЂњThe East Asian Financial Crisis: Diagnosis, Remedies, ProspectsвЂќ (Brookings Papers on Economic Activity, 1998).Д«ertrand Renaud, вЂњHow Real Estate Contributed to the Thailand Financial CrisisвЂќ, in chapter 9 of Koichi Mera and Bertrand Renaud (eds.), AsiaвЂ™s Financial Crisis and the Role of Real Estate (New York: M. BaliГ±o, Charles Enoch, Anne-Marie Gulde, Marc Quintyn and Leslie Teo, вЂњFinancial Sector Crisis and Restructuring: Lessons from AsiaвЂќ (IMF Occasional Paper No. See Financial Stability Board, вЂњShadow Banking: Strengthening Oversight and RegulationвЂќ, 2011 and also Deloitte Shadow Banking Index ( 310VgnVCM1000001956f00aRCRD.htm). Paul Krugman, The Return of Depression Economics and the Crisis of 2008 (New York: Norton, 2009), chapter 8.

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Another source of potential regulatory laxity and failure could arise from вЂњregulatory captureвЂќ, when officials charged with overseeing business entities end up protecting the interests of the companies instead of the interests of taxpayers and the general public. As was the approach in Chapter 11, for each type of failure, one example of problems encountered is drawn from the US experience and a second from another countryвЂ™s. This chapter presents cases and examples that will be discussed under various types of regulatory failure (see Table 12.1). Regulators may also be naive in failing to appreciate the risk of systemic crisis from the failure of too-big-tofail institutions or the risk of contagion across markets and countries. They may fail to regulate entire sectors of the housing finance system (regulatory blindness) or to exercise adequate supervision of the lenders and their intermediaries (regulatory myopia). Regulators, however, may fail to succeed in a number of ways. As bank failure can have serious consequences for individual customers, depositors and investors, as well as the economy, financial institutions are subject to a wide array of prudential regulations and supervisory review (see Chapter 6).