Author: Li Yang

Word count: 3327 font size: The financial crisis that originated in the United States and then quickly spread to the whole world not only hit the financial system in the United States and even the whole world, but also led to the global economic recession. Now it seems that the impact of this crisis is deep and the scope of damage is wide, comparable to the Great Depression in the 1930s and the stagflation crisis in the 1970s.

This financial crisis has exposed many defects in the financial system and its regulatory framework in developed economies. In order to reshape the American financial system, prevent the recurrence of systemic risks and financial crises, and avoid the situation that banks and other financial institutions have to accept government assistance because of risky transactions, the United States has carried out the largest financial law revision activity since the Great Depression in 2009.

2010 July 2 1 day, US President Barack Obama signed the financial supervision reform bill. So far, the first important legislation on financial supervision in the United States in this century has been settled, and the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereinafter referred to as the Dodd-Frank Act) has finally come out.

This new historic bill consists of 16 parts, with more than 800 pages and more than 1000 articles. It comprehensively reformed and revised the operating rules and regulatory framework of the financial system, including banks, securities, insurance, hedge funds, credit rating agencies, dealers, investment consulting institutions, accounting systems and listed companies. The new regulatory bill only defines the framework of reform, and its implementation needs further refinement by relevant regulatory authorities.

Because the United States occupies the most important position in the global economic and financial system, its domestic changes will have an important and substantial impact on the world. In view of the fact that the institutional changes in countries around the world will largely follow the footsteps of the United States, at least in important aspects, the new regulatory bill will have a huge spillover effect on the global financial regulatory system. Therefore, the financial circles in China must seriously study this bill: not only observe the new international trends, but also prepare for China's participation in international financial activities; And draw the essence from it, and provide important reference for China's financial reform.

Many clauses in the new regulatory bill talk about unification, strengthening, restriction, integration and prevention, which easily gives people the impression of "the return of state interventionism". However, if we carefully analyze and understand the attitude of the new regulatory bill to the existing financial operation mechanism, especially to the financial innovation that has been criticized in the crisis, it may be more appropriate to look at it this way: while providing a more perfect risk management mechanism, we are committed to preserving the basic mechanism of market allocation of resources to the maximum extent.

First of all, the financial regulatory framework should meet the needs of the development of the financial system, not the other way around. Since 1970s, with the promotion of financial globalization and financial liberalization, great changes have taken place in American financial system.

Mixed operation of financial institutions. Under the pressure of competing for high profits, the traditional business boundaries of financial institutions are increasingly blurred: commercial banks have entered the territory of investment banks, and their off-balance-sheet risk business has surpassed the traditional loan business, and "operating" and managing risks have become their new main businesses; Investment banks develop internal hedge funds through their increasingly large self-operated departments, and hedge funds begin to compete with traditional funds for business; Pension funds, insurance funds and money market funds also began to introduce risky assets that other institutions avoided.

The importance of financial market is increasing day by day, and the continuous innovation of financial innovation, especially the rapid development of financial derivatives, has led to the occurrence of financial disintermediation. The profitability and business model of the traditional banking industry have been fatally impacted, and its scale is shrinking day by day. At the same time, the financing function of the financial market is increasingly strengthened. With the drastic reduction of market transaction costs and the continuous enrichment of transaction varieties, more financial transactions are transferred from traditional financial institutions to financial markets. The traditional financial system with banks as the main body began to turn to the new financial system with capital market as the core.

The changes in the financial field are clearly reflected in the changes in the laws and regulations of financial supervision in the United States. Law on Deregulation and Monetary Control of Savings Institutions from 1980, Law on Savings Institutions from 1982, Law on Reform, Revival and Enforcement of Financial Institutions from 1989, and Promotion of Supervision of Foreign Banks from 199 1 Although the Financial Services Modernization Act and Commodity Futures Modernization Act of 1999 passed the Sarbanes Act in 2002 in response to the Enron incident, they are also full of false stories, and the trend of deregulation has not changed.

Compared with the above-mentioned series of regulatory laws and regulations, the outstanding feature of the new regulatory bill is to end the trend of "deregulation" in American legislation. However, its starting point and emphasis on restoring and strengthening financial supervision are not as aggressive as people predicted on the basis of linear thinking, and the spirit of Volcker's law is rarely invoked. Volcker's law was speculated in advance, and its essence tends to redraw the boundaries of the financial industry. On the contrary, it almost completely recognizes a series of changes in the American financial system since the 1970s, and only seeks to adapt to the new changes in the financial system by adjusting the regulatory framework and rules, so as to manage the new risks brought by the above changes. In this respect, the new regulatory bill runs counter to glass-steagall act, which originated from the Great Depression. It can be considered that the legislative spirit of the new regulatory bill is to improve and improve the technology and art of financial supervision and cover all financial products and services, all financial markets and all financial institutions as far as possible on the premise of retaining the basic achievements of financial liberalization in the past 30 years and confirming that marketization is still the basic direction of the future development of the US financial industry.

The second is to focus on establishing a regulatory framework rather than substantive control. In order to prevent systemic risks, maintain financial stability and better protect the interests of financial investors and consumers, the new regulatory bill sets up a series of new institutions such as the Financial Stability Regulatory Commission, the Consumer Financial Protection Bureau, the Financial Research Office and the Federal Insurance Office. At the same time, cancel the supervision office of savings institutions, transfer the supervision power to the Monetary Authority, and strengthen the powers of the Federal Deposit Insurance Corporation, the Securities and Exchange Commission and the Federal Reserve. These changes are not insignificant. However, behind these complicated changes, what we see is more the power adjustment between the regulatory authorities, and we rarely find the intention to directly restrict the free operation of the financial market. For example, the new regulatory bill transfers the consumer protection functions previously undertaken by various regulatory departments to the newly established Consumer Financial Protection Bureau, but this newly established institution is more responsible for coordination and does not add too many new regulatory contents. For another example, the new regulatory bill calls for raising the prudential standards for systemically important financial institutions, but on the one hand, it does not directly stipulate such standards, but authorizes the board of directors of the Federal Reserve to formulate regulations according to the actual situation and the reform process of international financial supervision. On the other hand, the proposed reform direction is mainly to improve the capital adequacy ratio, which is a market-oriented means to prevent risks. For another example, although the new regulatory bill includes hedge funds and OTC derivatives trading, the governance strategies proposed in the bill are mainly procedural requirements, such as registration, registration and centralized liquidation, and do not directly restrict their business activities. It should be said that the legislative spirit of the new regulatory bill is not to set specific proportions, indicators and requirements for the financial regulatory system in the United States, but to set an institutional framework for the future development of financial supervision in the United States and point out the development direction.

The third is to provide "better supervision" rather than "stronger supervision". The so-called "stronger supervision" aims to restrict the freedom of operation of market players to varying degrees; And "better supervision" not only means effectively managing risks and protecting consumers' interests, but also means not hindering the free operation of market players. This financial crisis has certainly exposed the oversight of the financial supervision system in the United States, and there is a problem of "no law to follow". At the same time, it also reveals that the original supervision system has not been effectively implemented, and the problem of non-compliance with laws is more serious. After-the-fact investigation of the bankruptcy cases of Bear Stearns and Lehman shows that under the original regulatory framework, if the original regulatory rules were strictly implemented, the two companies could have been saved. However, because those regulatory rules were not seriously implemented, the situation deteriorated and the two companies eventually fell into disaster. This means that if financial supervision can be done "better", even if the original regulatory rules are implemented under the original regulatory framework, the crisis will not be so rampant. Based on this understanding, strengthening the internal management and external supervision of the supervision department and improving the ability of supervision and law enforcement have become the important contents of the new supervision bill.

Generally speaking, the new regulatory bill echoes the reality of financial system development and innovation under the background of financial globalization and financial liberalization, and provides a way to solve the negative effects brought about by the new development of the financial system. As for how to strengthen supervision, although there is no clear answer, it will undoubtedly enhance the adaptability and inclusiveness of the regulatory framework and lay the foundation for ensuring the stable development of the financial system in the future.

The legislative intention of the new regulatory bill is to maintain financial stability, but the understanding that financial stability is only a means and financial and economic development is the ultimate goal runs through. Therefore, although the essence of the new regulatory bill is to maintain the stability of the financial system in the United States, under the pressure of financial globalization competition, we can clearly see the development orientation of the bill: the main tendency reflected between the lines is to require financial supervision to adapt to the development of finance, rather than to cut the foot. This legislative spirit is worth learning from the reform of China's financial supervision system. (This article is taken from the preface of Dodd-Frank Wall Street Reform and Consumer Protection Act published by China Finance Press on February 20 10, and the author is the vice president of China Academy of Social Sciences)? □