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The Restructuring of US Financial Regulatory System and its Implications(No.17, 2016)


By Zhang Liping& Peng Yiran, Research Team on “The Restructuring of China’s Financial Regulatory System”, Financial Research Institute of DRC

Research Report No.17, 2016 (Total 4900) 2016-3-9

Abstract:Since the Great Depression in 1929, the US financial regulatory system has made adjustmentsin light of new conditions when crisis broke out or the financial system went through significant changes. For instance, to comply with the cross-sector operation of the financial industry, the US government issued the Financial Service Modernization Act of 1999(GLBA) to form a new regulatory pattern relating to both sector regulation and integrated regulation, which is also known as a multi-pronged regulation.The federal government and the state government share the duty of divided supervision, namely, the two-tier regulatory system. The banking business and securities business are supervised respectively by the banking regulator and securities regulator of the federal and state governments, and the insurance business is mainly supervised by the Insurance Council of different states. After the subprime mortgage crisis in 2008, the U.S. issued the Dodd-Frank Act, which redefined the responsibilities of the U.S. financial regulators, established the FSOC(Financial Stability Oversight Council), and set up the Office of Financial Research whose work is to support the FSOC with detailed studies. As a whole, the new U.S. Financial regulatory system has improved the regulation of the Federal Reserveover systemically important financial institutions and OTC(Over-the-Counter) Derivative Market, and has strengthened protection for financial consumers and investors.

Key Words: financial regulatory system, implications, the U.S.