From Crisis to Confidence: What Is the Role of Regulation?

Joseph V. Carcello, PhD, CPA, CIA, CMA

In his 1982 book on regulation, now–Supreme Court Justice Stephen Breyer argued that the justification for regulation arises out of an alleged inability of the marketplace to deal with particular structural problems. Over the past 20 to 30 years, with the notable exception of the Sarbanes-Oxley Act (SOX), there has been a marked movement toward deregulation or, where there is regulation, toward a greater reliance on self-regulation. In my view, the events of the past year have clearly indicated that faith in the self-correcting powers of markets and self-regulation is misplaced faith.