This Article presents a theory for how policymakers should use stress testing as a tool of financial regulation. In … financial firm risk managers; and surveys the law and regulation of stress testing up to the present time. It also makes two …-based regulation” that acts on corporate planning processes rather than corporate actions or outputs; (2) encouraging “quantitative …

mission of identifying and containing risk in the financial system. Prudential regulation, the principal tool at the disposal … supervision has become policymakers' regulation of choice, to the point where it is now employed in the oversight and regulation …” — I argue that it is unlikely that prudential-style regulation, dependent as it is on the planning of a central regulator …

Should Congress enact a formal cost-benefit analysis requirement for financial regulation? I survey the nature of costs … and benefits of financial regulation, both “macro” regulation designed to stop crises and “micro” regulation of products …, markets, and institutions. Although I find that financial regulation often grossly violates cost-benefit tests, the nature of …

system of capital regulation that addresses these needs by making changes to all three pillars of bank regulation: only …

larger equity reserves would reduce the need for costly regulation. The proposed Financial Choice Act is a step in this …