BOE Governor Haldane Speech Criticizing Regulatory Complexity

Bank of England Governor, Andrew G. Haldane, delivered a speech titled "The Dog and the Frisbee" at the Federal Reserve Bank of Kansas City's 36th economic policy symposium.

The attached speech asserts that the complex regulations developed over recent decades may not only be costly and cumbersome, but also less effective than simpler regulations. He argues that regulatory response should be grounded in simplicity because complexity generates uncertainty, causes large banks to be "arguably, too big to manage," and requires ever-expanding resources both in terms of compliance and regulatory oversight. Governor Haldane draws on examples from outside economics and finance as well as contrasting his views with real world regulatory developments. Specifically, he cites Dodd-Frank rule-making and the Basel requirements as examples of the modern trend toward increasing regulatory complexity.

Lofchie Comment: Given that Governor Haldane was a non-U.S. guest at a U.S. regulatory event, his speech seemed quite pointed in its criticism of the regulatory complexity of Dodd-Frank. Further, this criticism follows sharp criticism of the CFTC rules implementing Title VII of Dodd-Frank by the Financial Services Authority and other non-U.S. regulators, as we recently reported. (To find the criticism by the FSA and other non-U.S. regulators, search a range of 30 days and check the Cross-Border box on the left.) It will be interesting to see how the U.S. government and regulators respond to such sharp criticisms from our allies. While Governor Haldane criticized Dodd-Frank, his remarks were by no means "deregulatory" in nature. That is, he favors simpler regulation, not more permissive regulation.