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Can finance be regulated?

Everyone agrees that financial regulation needs an overhaul. Some say that recent scandals show the need for more intervention, others that the science of derivatives makes regulation impossible. Bruce Page explains

By Bruce Page   December 1997

Inhabitants of a community often agree that “something must be done.” Thus after the BCCI scandal, the various pensions scandals, the Barings scandal, the Morgan Grenfell scandal, the NatWest derivatives scandal-and minor scandals obscured by more distinguished ones-the City of London’s consensus has been that something must be done about financial regulation.

The government not only said that something must be done, it launched the Financial Services Authority (FSA) and made clear that this will not much resemble past practice. Such activism erodes consensus, revealing that the City disagrees considerably about what ought to be done. Indeed, some of its…

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