Legal responses to the financial crisis of 2008 in Canada, the U.K. and the U.S.

AuthorParcasio, Marjun

Stock tickers with downward arrows. Index charts and monitors evincing the value lost by public companies and currencies overnight. These were scenes familiar to those who worked on Wall Street, the City, and other global financial centres in 2007 when the financial crisis began in earnest. But beyond the corporate towers of the business sector, the crisis also had a human impact. The queues at bankruptcy court grew longer as more and more individuals received notices of impending layoffs or faced foreclosure of their homes. The word "recession" became normalized in conversations in boardrooms, at dinner tables, and ultimately, in parliaments as legislators moved to address the resulting uncertainty.

If there's anything that swells the size of the statute book, it's a financial crisis. Volumes of primary and secondary legislation were enacted to address its repercussions. A brief look at these laws reveals much about the crisis itself, including its perceived causes and the means by which governments attempted to alleviate its impact on their citizens.

Financial regulatory reform

The financial services sector was subject to sweeping reforms, which was particularly significant for firms headquartered in New York and London. In the United States, the Dodd-Franck Act survived through numerous revisions in Congress and became law in 2010. Across the Atlantic in the United Kingdom, Parliament passed various bills which include, amongst others, the Financial Services Act 2012 and the Financial Services (Banking Reform) Act 2013. While the primary legislation in both countries set out the general parameters for reform, an explosion of administrative law instruments setting out the detail of the changes also took place. The resulting legislative landscape is complex, although there are common themes to the reforms enacted in various jurisdictions.

One fundamental concern was addressing systemic risk. The collapse of banks like Lehman Brothers or Northern Rock illustrated how certain triggers could easily have a contagion effect given the interdependency of the financial sector and the broader economy. One issue was that, prior to the crisis, the supervisory infrastructure had been fragmented and ineffective. Regulators had divided responsibility and authority, and a lack of oversight meant that they failed to read the warning signs. Moreover, the development of certain financial products in the shadow banking sector meant that regulators had a...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT