How to Regulate During a Financial Crisis

Since President Donald Trump entered office, the U.S. economy has by many measures continued the upward trajectory started under former President Barack Obama. Most notably, the economy grew 2.3 percent during his first year in office and unemployment has dropped to 3.8 percent, the lowest in 18 years. But what happens when the good times end? Yale Law School professor Roberta Romano argues that, when the next financial crisis and economic downturn hits, the nation will need procedural requirements to ensure the most decisive yet flexible regulatory response. Whether enacted through legislation or administrative rulemaking, federal regulation normally involves a slow, deliberative process. But when faced with rapidly deteriorating economic conditions and imperfect information—along with jobs, personal wealth, and the health of the economic system on the line—policymakers must respond quickly, opening the door for potentially poor decision-making. “By tending…

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