Challenges for Cost-Benefit Analysis of Financial Regulation

I survey the nature of costs and benefits of financial regulation, both macroregulation designed to stop crises and microregulation of products, markets, and institutions. The nature of financial regulatory costs and benefits poses a great challenge for formalized analysis. Health-and-safety or environmental regulation focuses on simple actions, like releasing a pollutant. The costs and benefits of financial regulation focus on the behavioral, market, general equilibrium, and political reactions. I offer some suggestions on the structure of a cost-benefit process that recognizes the nature of financial regulation costs and benefits, lying between pure conceptual cost-benefit analysis and the rigid legal structure currently envisioned.