"Fixing Financial Markets: The Role of Accountability Regimes". Prepared for delivery at 2010 Annual Meeting of the Midwest Political Science Association, April 22-25, 2010, Chicago IL.
Abstract: After a brief consideration of the dynamics of the “blame games” that generate and shape the current reform agenda for fixing financial markets, I argue for an approach that goes beyond mere tinkering with traditional regulatory mechanisms and instead focuses on the need to reform the “governance regimes” of the financial sector. In the process I make the case for the existence to two interrelated regimes within the domain of governance requiring attention if we are to make headway in the design of relevant and effective reforms. One of those regimes -- the regulatory, which focuses on governance through control -- has received considerable attention from analysts, and I highlight one effort [by Hood, Rothstein and Baldwin (2001), hereafter designated as HRB] at framing the elements of that regime. The other regime -- accountability, which fosters governance through the creation, allocation and management of expectations -- requires more analytic attention, and I offer the foundations for a framework related to that regime that seeks to emulate the logic of the HRB effort. I then articulate some basic “design principles” that need to be kept in mind as we deal with the future of financial market governance.