This panel was convened at 3:30 pm, Wednesday, April 9, by its moderator, Yesha Yadov of Vanderbilt Law School, who introduced the panelists: Michael Barr of the University of Michigan Law School; Christopher Brummer of Georgetown University Law Center; Jonathan Macey of Yale Law School; and David Zaring of the University of Pennsylvania's Wharton School. *
GLOBAL ADMINISTRATIVE LAW AND THE POST-CRISIS FINANCIAL ORDER
By Michael S. Barr ([dagger])
The global financial crisis caused widespread harm not just to the financial system, but also to millions of households and businesses, and to the global economy. (1) The crisis revealed substantive, fundamental weaknesses in global financial regulation, and raised serious questions about whether national regulators and the international financial regulatory system could ever be up to the task of overseeing global finance. The Bretton Woods institutions (the International Monetary Fund, the World Bank, and the World Trade Organization) were never really equipped to deal with the growing complexity, breadth, and size of the global financial system, and instead left rulemaking and supervision largely to the domestic arena. The cross-border rules that were developed--essentially by national regulators and the international standard-setting bodies that took root in this global institutional lacuna in the 1980s--proved woefully ineffective. Despite strategies to increase the accountability and legitimacy of these hybrid standard-setting bodies, (2) the rules failed substantively, and overwhelmingly. Global finance, and a "soft-law" architecture left unchecked by a decades-long regulatory race to the bottom, proved weak in the face of global financial institutions and crushed the real economy.
The failure of the pre-crisis regulatory architecture to manage the financial system at the global level raises two fundamental questions: First, how can we build an effective international financial architecture with more than one architect? And second, how can we foster a global regulatory architecture that is legitimate and accountable--one that reflects our most basic values?
The rubric of global administrative law (GAL) provides a useful framework for thinking about how to answer these questions. Specifically, it provides a way of thinking about how we might embed in the international regulatory architecture procedural values that are consistent with the normative justifications for this architecture. (3) At the most basic level, we want global institutions that are effective--meaning that they establish norms that are treated by national actors as obligation, that there are systems in place to monitor compliance with these obligations, and that these obligations are enforced. (4) Effective global institutions will help produce rules and other mechanisms that work at a substantive level and that can prevent the significant harm the financial system can do to the real economy when it fails. We also need global institutions that are legitimate, in the sense that the decisionmaking criteria and processes they use are seen as normatively correct, and in the sense that the outcomes produced by these mechanisms respond substantively to the public's interests and values. Finally, we ought to demand accountability. At its most basic level, the international system requires accountability of its organs to national governments, but global administrative law suggests a deeper commitment to public accountability, for example, through transparency, public engagement in decisionmaking, and initiatives to embed global rule-making in national processes of public accountability, such as notice and comment rule-making.
There is important interplay...