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Publication Date

2020

Abstract

Reforms which seek to overhaul the Dodd-Frank Act
have begun to gain support within the Trump
Administration and Congress. The leading proposals go
beyond technical matters and reflect a wholesale
critique: financial regulation has become too
burdensome, too complex, and grants too much
discretion to regulators. This Article argues that what is
really at stake in these debates is the distinct issue of
“regulatory overlap”—the joint use of multiple legal
rules to address a common market failure. It begins by
developing a general framework for analyzing
overlapping legal rules of all kinds. That framework is
then applied in case studies of the two cornerstones of
financial regulation: capital adequacy requirements and
resolution authority procedures.
The most direct contribution of this Article is to
substantive issues in financial regulation. Each case
study yields insights about particular portions of the
Dodd-Frank Act that pending reforms attempt to
eliminate, as well as the big picture problems of systemic
risk and banks that are “Too Big To Fail.” On a more
theoretical level, it also situates the concept of regulatory
overlap within the law-and-economics literature on the

optimal design of legal rules, where it is otherwise
conspicuously absent. Lastly, this Article shows how an
analysis of overlapping rules in finance carries lessons
for the regulatory process as a whole. It thereby adds to
scholarship on administrative law, especially to
research in that area that deals with a related set of
problems concerning agency jurisdiction, cost-benefit
analysis procedures, and the role of uncertainty in the
policymaking environment.

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