Regulation

In this second installment of a two-part series, David Dubrow and Kent Hiteshew propose reforms to improve disclosure standards in the municipal bond market, exploring both legislative and regulatory approaches. They outline eight key guidelines for enhancing transparency and consistency in municipal offering statements, aiming to bring these disclosures into the modern era and better protect investors.

Should we pay regulators according to their performance? In a new paper, Jason Chen, Jakub Hajda, and Joseph Kalmenovitz show that a pay-for-performance system has a surprising effect: it increases regulatory effort but also motivates regulators, especially the productive ones, to quit and join the private sector.

Johannes Fritz and Tommaso Giardini examine the state of AI rulemaking around the world and find that, despite global alignment on principles, execution at the national level diverges on three important metrics. The risk is fragmentation in AI as firms choose to exclude entire markets rather than navigate the intricacies of compliance in different regions.

Blaine Saito writes that the end to the Chevron deference doctrine could lead to a return to the National Muffler standard that grants judicial deference to long-standing agency rules and rules promulgated contemporaneously with Congressional statute. This may mean that the courts overturn newer taxation rules, though the Internal Revenue Code provides explicit discretionary rulemaking power to the Treasury and Internal Revenue Service, which should further limit Loper Bright’s impact on the agency.

Artificial Intelligence (AI) is poised to permeate across different industry sectors, offering unprecedented opportunities alongside significant risks. Effective governance necessitates coordinated cross-border efforts to build institutional expertise, dispel misconceptions, foster innovation, and align global safety priorities. Advocating structured dialogue and a bottom-up approach, Oscar Borgogno and Alessandra Perrazzelli present a proposal which aims to avoid institutional redundancy and legal unpredictability for individuals and firms.

Hamid Mehran examines the governance failures at Boeing that led to safety issues with its aircraft and proposes several measures to improve the company's safety culture and accountability. Mehran suggests enhancing board accountability through increased disclosure requirements, improving FAA oversight, fostering a culture that prioritizes safety and employee concerns, and restructuring employee compensation to incentivize teamwork and vigilance in detecting safety issues.

The Domain Name System (DNS), a 1985 technical invention, was transformed into critical global infrastructure by the policies of the United States government beginning in the 1990’s. While some challenges remain, the light-touch regulation promoted by both parties has proven highly successful.

ProMarket Student Editor Surya Gowda speaks with Georgetown University postdoctoral fellow Katie J. Wells about her new book with Kafui Attoh and Declan Cullen, Disrupting D.C.: The Rise of Uber and the Fall of the City. Wells discusses how Uber stepped in to solve local government failures, but introduced new problems in the process.

The following is an excerpt from Despoina Mantzari's book, "Courts, Regulators, and the Scrutiny of Economic Evidence," now out at Oxford University Press.

Single-name credit default swaps help investors manage risk, but the 2023 financial crisis showed how these opaque derivatives can suddenly throw financial markets into turmoil. Randy Priem argues that mandatory central clearing, which some authorities have suggested as a solution to managing this risk, is not the holy grail solution they believe it to be.