Research On Legal Issue Of Banking Regulatory Power Configuration

After the sub-prime crisis, banking regulation has become the focus of much thought again. In rethinking about banking regulation, most experts consider the cause of the crisis being from the structure but most of the research focuses on the improvement of banking activity rules with some focus on the strengthening of the regulatory institution. There is no actual research on how the structure was the cause of the crisis. Banking regulations are the rule system. If the structure is fully understood, finding the key to solving the problem becomes a productive approach. Researching the configuration of banking regulatory power is the best way to understand the structure of banking regulations. This is because regulation is a system while banking regulatory power is the central element in this system. The configuration will determine how the central element operates and what the relationship is between these central elements and their subordinate elements. If we know the rule of the configuration we can discover the rule of movement of these sophisticated systems. We can then provide the perfect direction as to how to improve banking regulations.First, we must research the nature of the objects in the configuration. Second, we should define the specialization of the objects in the configuration. Third, we must research the relationship between the individual elements of the object in the configuration. Fourth, we must research the legal function of the configuration. Lastly, we must research the best method of implementing the configuration.Power and rights are different manifestations of interests. Regulatory Power includes power and also includes rights. The nature of regulatory power is the manifestations in law of these specific interests. The reasons for the regulating a bank can be derived from bank conversion and information creation functions, but the setting up of regulatory powers for a bank is not the result of logical deduction. Instead it is the choice of history. As long as banks exist, regulation or regulatory powers will not be done away with. Interest formed by the activities of banks include: creditor interests, equity interests, property interests, common interests, monetary management interests, public interest. Among them are a competitive relationship, a compatible relationship, constraint relationship and structural relationship. Any benefits are ultimately for the purpose of acquisition and use of resources. The function of the law is to establish and maintain the order of allocation of these resources. Concerning the configuration of the regulatory power of the bank, the manifestations of the functions of the law are hierarchical classification, structure selection, conflict resolution and operation coordination. The configuration of the regulatory power of banking is redistribution in Law.Whether or not the separation of powers in the constitution is actually reflected is still subject to doubt. Moreover, in the development of modern State functions the boundaries of the division of power is becoming more and more challenging. The State is no longer comprised of just central government's power, the functions of State also cannot just be simply divided into Legislative, judicial and administrative. Large amounts of regulatory powers used as new forms of social control tools in the regulation system are being recognized and assigned.Banking regulatory powers should be seen as a measure that the Law gives specific subject for achieving interest in the interest system that is produced because of banking financial intermediation. Banking Regulatory powers have the specificity of the main subject, the unity of the object, the mandatory nature of the means, the statutory nature of the scope, and the coordination of the configuration. Banking Regulatory power manifests as the intervention of neutral matter, compatibility of the statutory and agreement. Power objects include behavior and property. It is a comprehensive agency regulation, The meaning of banking regulatory power configuration is the law's recognition, definition, exercise of the achievement means of the interest formed because of banking regulation, and the institutional arrangements that constraints provide. The result of the configuration of banking regulatory power is influenced by multi-faceted factors. These factors include: traditional interest pattern, the economic status of the bank, the ownership structure of the bank, the rule of law, the legal system, political power, and historical and cultural traditions. According to the characteristics and content of banking regulatory power, in banking regulation, this narrow system of rules, the law in the configuration of banking regulation mainly manifests in the configuration of the main subject, substance power configuration and the configuration of procedural rights. In the entire abstract rule system, the configuration of banking regulatory powers actually can all be attributed to the boundary points (sub-sectioning) of the interests. The three aspects of the configuration of regulatory power in banking regulation actually also represent different objective interests. The configuration of regulatory powers between main bodies directly recognizes the interests of the main bodies. The defined entity of main body power is the result of the balancing of different interests. The configuration of procedure then includes the selection of interest game order, including bank interests, i.e the maintenance of public order interest.The failure of the banking regulatory power configuration is the result of the operation of the structure not complying with the intent of the law which created the power to regulate bank. Opposing the intent of the law creating these power, is the basic structural defect of the regulatory system which resulted in loss of the interests represented by regulatory power under the law. The sub-prime crisis reveals the delicate and difficult balance between the interests represented by the regulatory power, the breaking of which resulted in the sub-prime crisis. By using the theory of banking regulatory configuration to analyze the sub-prime crisis we can discover the underlying causes of the American banking regulation trouble. One of these causes is the over-emphasis of market discipline. Another is the fragmentation of regulatory power. An additional cause is the lack of actual power to the banking regulator. Also, the banking regulator's power focuses on the details of bank actions instead of the big picture. Finally, there is a neglect of effective supervision of the credit rating agencies. The dilemmas faced in the banking regulatory configuration is general throughout the world as illustrated by comparing the sub-prime crisis to the former crises such as the Asian financial crisis and the Great Depression of the 1930s. Motivating the regulators is difficult because of the capture of the regulator by the banks. Another dilemma is that the restraint of power decreases the efficiency of the whole banking system. In addition, there is a conflict between traditional judicial goals and those of the banking regulations. The fourth dilemma is caused by the flexibility and freedom of the regulators is mis-matched with the responsibility of the regulators. Finally, the political factor leads to instability of the regulatory power configuration.The global trends of the banking regulatory configuration can be assessed by comparing the major nations of the world such as Canada, Germany, South Korea, Japan, UK, with the recently enacted laws of the USA on this subject. One trend is to move the banking regulatory power further away from the central banks gradually. Another main trend is to concentrate the financial regulatory power in one central institution. The third trend is the formation of a comprehensive banking regulatory institution. Finally, there is the trend to increase the level of independence of the banking regulators through the restriction of the power.Banking regulatory power configuration by Chinese law is determined by specific characteristics of China. Chinese banking regulatory power configuration has its own special developmental path and results. Chinese legal rubs of regulatory power configuration exist in: the form of regulatory power focuses on rule making; the fact that the only owner of regulatory power is the government; the lack market regulatory power and autonomous regulatory power; the justice of the regulatory power originates only from the sovereign power of the government; the value of safety reflects only the nation's interest; the lack of flexibility of local regulators; and, finally, the lack of market environment factors leads to weakness of regulation of disclosure of banking. All of these problems of the banking regulatory power configuration stems from the basic Chinese contradiction which can be divided into two: operating and structure. The structure contradiction includes conflict between central bank and other banking regulators, as well as the conflict between regulator coordination and the supply of law resource. Also included is the conflict between the single form of a banking regulator and plural interests in banking regulation. Lastly is the conflict between the legal ability to perform and the actual ability to perform. The operating contradiction includes confusion of goals as well as the conflict between the strong rule maker power and the lack of public confidence toward the regulator. Additionally, there is the indistinct definition of the interest represented by the regulatory power.Currently, the Chinese central issue of improving banking regulatory configuration revolves first around how to perfect the structure of the banking regulatory power based on the system at present. Secondly, China needs to address the issue of how to increase national competitive ability to adapt to a change of various global environments. Lastly, China must determine how to solve the problems of plural interests represented by banking regulatory power based on China's specific legal condition. China possesses the proper conditions necessary to solve all of the problems of the banking regulatory power configuration. After the causes of the contradiction are determined, the principal of banking regulatory configuration can be updated to reflect these findings. According to the principles , the perfecting of the banking regulatory configuration must be achieved on the aspect of law and the structure.