COMMENT The US government has so far got the balance right in fighting the crisis, prioritising immediate steps to revive credit markets and the macroeconomy over the long term. As it now rightly turns its attention to regulatory reform, it must steer clear of both conceptual confusion and bureaucratic turf war.
Financial market regulation must aim at two things: protecting investors against abuse, and containing systemic risk. The current system does passably on the first; it came close to catastrophe on the second. But the two should not be conflated.
