Title: Re-regulating finance to return markets at the service of society

Authors: Giovanni Ferri

Addresses: Dipartimento di Scienze economiche, politiche e lingue moderne, LUMSA University, Via Pompeo Magno, 22, 00192, Roma, Italy

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.

Keywords: financial regulation; financial capitalism; sustainable finance; financial crisis; banking diversity; light touch regulation; financial stability; financial markets; re-regulation; financial sustainability.

DOI: 10.1504/IJHD.2015.072185

International Journal of Happiness and Development, 2015 Vol.2 No.3, pp.231 - 249

Published online: 02 Oct 2015 *

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