Re-regulating finance to return markets at the service of society Online publication date: Fri, 02-Oct-2015
by Giovanni Ferri
International Journal of Happiness and Development (IJHD), Vol. 2, No. 3, 2015
Abstract: The Great Financial Crisis primarily resulted from deregulation/liberalisation of finance. We discuss the deep mistakes of the 'light touch' regulation of finance subjugating commercial banks to financial-market-friendly rules. Those rules were reportedly violated in a blatant way, to the point that regulatory and courts' actions inflicted massive fines and/or settlements to the largest banks. Moreover, we claim that the current re-regulation keeps erring and does not cater for banking diversity. Thus, financial capitalism is still keeping society at the mercy of market idolatry, a dangerous stage in which finance is the least trusted industry. We argue that lacking this time a strong prosecutor, such as Ferdinand Pecora in 1933, made more difficult a serious re-regulation, the only path to restore financial stability. Appropriate leadership needs to reset markets at the service of society. Otherwise, financial sustainability risks being permanently endangered and the stability of the world as well.
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