Wasting a Crisis: Why Securities Regulation Fails [Hardcover]

The recent financial crisis led to sweeping reforms that inspired countless references to the financial reforms of the New Deal. Comparable to the reforms of the New Deal in both scope and scale, the 2,300-page Dodd-Frank Act of 2010the main regulatory reform package introduced in the United Statesalso shared with New Deal reforms the assumption that the underlying cause of the crisis was misbehavior by securities market participants, exacerbated by lax regulatory oversight.

WithWasting a Crisis,Paul G. Mahoney offers persuasive research to show that this now almost universally accepted narrative of market failurebroadly similar across financial crisesis formulated by political actors hoping to deflect blame from prior policy errors. Drawing on a cache of data, from congressional investigations, litigation, regulatory reports, and filings to stock quotes from the 1920s and 30s,Mahoney moves beyond the received wisdom about the financial reforms of the New Deal, showing that lax regulation was not a substantial cause of the financial problems of the Great Depression. As new regulations were formed around this narrative of market failure, not only were the majority largely ineffective, they were also often counterproductive, consolidating market share in the hands of leading financial firms. An overview of twenty-first-century securities reforms from the same analytic perspective, including Dodd-Frank and the Sarbanes-Oxley Act of 2002, shows a similar pattern and suggests that they too may offer little benefit to investors and some measurable harm.

Paul G. Mahoneyis a David and Mary Harrison Distinguished Professor of Law at the University of Virginia School of Law.
 

Acknowledgments
Introduction
Chapter 1. Long before the New Deal
Chapter 2. The Blue Sky Laws: A Tale of Progressives and Interest Groups
Chapter 3. What the Securities Act Got Right
Chapter 4. What the Securities Act Gotló