The Use of Economic Analysis to Affect Public Economic Policy
The Case of the Shadow Financial Regulatory Committee
George
Kaufman is professor of business administration at Loyola University,
Chicago, where he was twice named outstanding faculty member. He is co-chair
of the Shadow Financial Regulatory Committee, which he helped found in
1986. He is a prolific writer, focusing on domestic and international
bank regulatory and supervisory issues and deposit insurance. He is executive
director of the Financial Economists Roundtable and serves on the editorial
boards of banking and economic publications. He received his BA from Oberlin,
his MA from the University of Michigan, and his Ph.D. from the University
of Iowa.
Presented at the NABE annual meeting on September 30, 2002 in Washington, D.C. in acceptance of the Adam Smith Award.
Promotion of sound economic policy is frustrating, not so much because policy-makers do not understand its value but because its value is realized over the long run; and policy-makers have short-run perspectives. Crises, however, give rise to opportunity for good policy; and the banking and thrift crisis of the 1980s provided the impetus and credibility of the Shadow Financial Regulatory Committee. The success of the Committee was due in large part to its proposals for practical, effective remedies. The Committee has continued to provide a voice that is independent of industry and regulators in support of a sound and efficient banking financial system. It has a preference for market-based solutions, and its success has spawned similar organizations in fifteen other countries, with others being planned.