The Reform Of U.S. Legal System Of Finanical Regulation And Its Implications On China

It has been five years since the U.S. subprime mortgage crisis began in April2007. In the current financial crisis, subprime mortgage crisis emerged in the financialmarkets and then spread to real economy in the U.S., which caused the shrinkingeconomy of the U.S. and the subsequent world economic crisis; The economic crisisarising from the real estate market turned the financial crisis into a global one; Thefinancial crisis shifting from capitalist economy to real economy caused great traumato the global economic market. Due to its inadequate financial regulations, the USgovernment’s responses to the financial crisis were criticized domestically andinternationally. Financial liberalization, which had brought enormous benefits to theUS and turned it into the world financial center, became the process of financialdisaster overnight. In American financial market, since “double long” and sub-sectorregulatory system have been proved the lack of resilience of the crisis, so USgovernment has set about changes in the regulatory systems after the financial crisis.In June,2009, U.S. Treasury officially published “the White Paper on the Reform ofFinancial Regulation”. By now, the idea of financial reform and financial regulationhas penetrated into all walks of life. With the reform of American Financial Systemand the reflection on the problems arising from sub-sector supervision, cross-sectorintegrated supervision and the problems it is faced with will gradually become the core issue of financial regulation. And that represents a useful effort for China’sfinancial markets.Based on the analysis of the changes in the legal system of American financialregulation in20thcentury, the thesis focuses the research on the major reforms aboutthe legal system of American financial regulation after the financial crisis. Itelaborates the background, process, main contents and core values of the set ofreforms. And it further puts forward proposals about the development and innovationof the legal system of China’s financial regulation. In order to distinguish betweeneach financial crisis breaking out in history,“the current financial crisis” mentioned inthe thesis hereafter refers to the one triggered by U.S. subprime mortgage crisis in2007and quickly spread all over the world. The thesis is divided into seven parts, i.e.the introduction and the other six chapters, summarized as follows:The first part: Introduction. There are four sections, i.e. the background of topicselection, research values of the selected topic, research methods and literature reviewof the research. By introducing the background of the topic selection this partdescribes the great significance of financial regulation, the values of topic research,the research methods used in the thesis and the viewpoints about the current reformsin American financial regulation. Thus this part functions as the start of the wholethesis.The first chapter focuses on the drawbacks of the U.S. financial regulatory legalsystem, which were exposed in the financial crisis. By analyzing the “double long”regulatory system and the regulatory philosophy of self-regulation and "deregulation",the author found out that on the eve of the financial crisis, the highly-mixed financialoperations, lax regulation and inefficient regulatory body system in the financialmarket reveal the deep roots of the financial crisis in the legal system of financialregulation.The second chapter focuses on studying the reform act of the U.S. financialregulatory system. As the current financial crisis resulted from subprime mortgagecrisis, so this chapter first analyzes the cause and the basic rules of the subprimemortgage crisis, essentially explains the process of its spreading and elaborates how it was exacerbated into financial crisis, then it further explains the U.S. financialregulatory system as well as the changes in the U.S. financial regulatory theory bymeans of financial legislation and finally it makes comments on the important reformact--"Dodd-Frank Act", regarding its content, influence, effectiveness of supervisionand dissenting voices.Following the history of the U.S. financial regulatory philosophy, the thirdchapter explores the connotation and innovation of the change of regulatoryphilosophy in the financial regulatory reform. This chapter begins by detailinghistorical process of the U.S. financial regulatory philosophy since1930s, from freecompetition to the reconstruction of government regulation; secondly, based on thestatutory firewall, indirect government regulation of private and public interests, aswell as government intervention in the free market, it proves that the U.S. financialregulatory philosophy has changed from the financial liberalism into the governmentintervention in the market regulation; Finally, it explores the proposal for limitingspeculation on derivatives raised by professors Posner and Weyl at University ofChicago under the influence of the new regulatory philosophy, who aim to providecorrect power guidelines for those regulatory agencies with financial productsjurisdiction in order to improve the efficiency of supervision.The fourth chapter explores the transformation of the primary objective of theU.S. financial regulation from financial efficiency to consumer financial protection.This chapter first outlines the development of the U.S. pre-crisis financial regulatorygoals and the evolution of the consumer financial protection in practice, then itdiscusses the association between consumer financial protection and systemic risk inthe U.S. subprime mortgage crisis and verifies that the relationship between consumerfinancial protection and the systemic risk in financial sector is mutually reinforcingrather than mutually exclusive, and finally it summarizes the provisions of theConsumer Financial Protection out of three financial legislations enacted by the U.S.government after the financial crisis and makes objective comments and analysis onthem.The fifth chapter focuses on the innovation of the U.S. financial regulatory reform, changing from functional supervision to comprehensive prudentialsupervision. This chapter first classifies U.S. pre-crisis financial regulatory frameworkand its historical process; secondly it analyzes the controversy over the U.S. pre-crisisfinancial regulatory system; finally, it explains the new changes of the U.S. financialregulatory system from the perspective of macro-and micro-prudential supervision,consumer protection, and adjustment of the regulatory framework and crisismanagement and resolution mechanisms.The sixth chapter mainly concerns about the enlightenment of U.S. financialregulatory reform on China. This chapter first lists the impacts and losses caused bythe U.S. financial crisis on China; secondly, it sorts out the history and presentsituation of China’s financial regulatory system and analyzes the risk status of China’sfinancial system at this stage, including operational risk and long-term systemic risks.Based on the above-mentioned research, the author summarizes the problems faced bythe financial regulatory reform in China and provides some objective advice for theconstruction of China’s financial regulatory system.