Study On U.s. Financial Regulation And Reform In The Context Of The Sub-prime Mortgage Crisis

Subprime mortgage crisis spread from the financial markets to the real economy, the crisis made the U.S. economy into a malaise, and then triggered a global economic recession. The crisis began in the real estate bubble burst, spread from the real estate market to the credit derivatives market, and then evolved a global financial crisis. It caused serious damage to the global market from both entities and the capital aspects. Many large financial institutions close down or merge. Financial regulators take the undeniable responsibility for the crisis. Financial deregulation and cross-functional overlap with the vacancy of U.S. financial regulation led to a huge loophole, which laying hidden dangers of the outbreak of the financial crisis.Constant improvement and development of the financial regulatory system adaptive system is an important aspect to promoting a healthy financial industry. To strength the effective financial supervision while actively promoting financial innovation, financial sector can achieve a sustainable development, and that is why the U.S. authorities takes a series of regulatory reform measures. If China wishes to avoid the crisis in financial innovation environment, one of the key method is to establish a suitable financial system regulatory regime . In-depth analysis of the shortages of the U.S. financial supervision in the case of subprime mortgage crisis and the reform program of the U.S. financial regulatory has a positive theoretical and practical significance to the economic development of countries around the world, especially for China which is in the process of institutional transformation and reform at present.The structure of this article can be divided into four parts:The first part introduces the theoretical basis of financial regulation. Following the train of thoughts, this part mainly explained the evolution of financial supervision theoreties which can be represented by the U.S. supervision theory, and then it concentrated on the representative theory of financial regulation and the content.The second part introduces the U.S. Financial Supervision System before the subprime mortgage crisis. On the basis of analyzing the U.S. financial regulatory framework and characteristics, and from both the positive and negative point of view to analyze the supervision framework, we can get a in-depth analysis about the shortage of the U.S. financial regulation in the next chapter.The third part introduces the formation of the U.S. subprime mortgage crisis and its transmission mechanism, which caused a worldwide and profound negative impact. Then it deeply analyses the surface reasons and deep reasons of the inefficacy of the U.S. Financial Regulatory, and analyses the relationship between the financial supervision and the financial innovation by related theories of Game Theory . Finally, the system described the reform program and initiatives of the U.S. financial regulatory system after the crisis.The fourth part analyses the status of China's financial supervision which combined with the analysis of t development of the U.S. financial industry and its financial regulation. Then it use the cost-benefit theory to research how to use financial supervision resources effectivly and how to develope a effective financial supervision. Sum up the lessons of the U.S. financial regulatory and the reform program of the U.S. financial regulatory , then it puts forward improvements for the financial supervision and the countermeasures which are adequate for of China's national conditions.