On October 18, federal regulators released Prudential Financial—the last remaining systemically important nonbank financial institution—from enhanced government oversight. This Essay contends that Prudential's deregulation was both unwise and illegal. In removing Prudential's “systemically...

Since the financial crisis, policymakers have developed two different approaches to systemic risk arising from nonbank financial firms such as insurance companies and investment banks. The first, dubbed an entity-based approach, empowers a public entity like the Financial Stability Oversight...

The United States' banking system has a problem: some financial conglomerates are so vast and complex that their executives, directors, and shareholders cannot oversee them effectively. Recognizing this “too big to manage” (TBTM) dilemma, both major political parties have endorsed breaking...

The recent financial crisis demonstrated that, contrary to longstanding regulatory assumptions, nonbank financial firms — such as investment banks and insurance companies — can propagate systemic risk throughout the financial system. After the crisis, policymakers in the United States and...

In the aftermath of the Great Recession, shareholders and regulators expect financial institution boards of directors to play an active role in risk management. To date, however, shareholders, policymakers, and academics have ignored a critical shortcoming: the directors of the United States'...

When the Gramm-Leach-Bliley Act authorized financial conglomeration in 1999, Professor Arthur Wilmarth, Jr. presciently predicted that diversified financial holding companies would try to exploit their bank subsidiaries by transferring government subsidies to their nonbank affiliates. To prevent...

After the 2008 financial crisis, policymakers developed two different approaches to systemic risk arising from insurance conglomerates and other nonbank financial firms. The first, dubbed an entity-based approach, empowers a public entity like the Financial Stability Board or Financial Stability...