Systemic Risk Management and Regulation Relationship in the Context of Dodd-Frank Wall Street Reform and Consumer Protection Act

Global financial crisis has intensively affected U.S. economy and global financial system. There are still many problems remain unsolved after the first shock of crisis such as effectiveness of policy measures, concerns on public interventions etc. This paper analyzes the relationship between systemic risk Management and regulation in the context of rules and regulations of the Troubled Asset Relief Program (TARP), which was created by the Emergency Economic Stabilization Act of 2008 (EESA), and Dodd-Frank Wall Street Reform and Consumer Protection Act. It seems diffucult to predict potential success of the above regulations for now. But it is possible to claim that these regulations has increased the power of politicians and bureaucrats. It may be observable that the winner was the “markets” at the end of the financial failure turmoil spiral of post 1980's. If this phenomenon would also be valid in post crisis period, new regulations may not satisfy the expectations. In this context, systemic risk arising from the too big financial institutions would continue to threat global financial system. Additionally, however criticisms on the current regulatory structures of GSEs (specifically for the Fannie Mae & Freddie Mac) seem noteworthy, it would better to wait and analyze the outcomes of current policies on the GSEs