Abstract
Financial regulation is usually enacted in the aftermath of financial crises. This essay outlines the possible role of dynamic elements in financial regulation. The concept of dynamic regulation supports a regulatory structure that curtails the regulatory sine curve and its negative and costly consequences. The regulatory sine curve illustrates rulemaking following financial crises and the inevitable relaxation, retraction, and revision of established rules thereafter. After a short introduction, Part 1 introduces the literature on the political economy of financial regulation, delineates common denominators of financial crises, and illustrates the sine curve of financial regulation by discussing examples of regulatory expansion and contraction post SOX and Dodd Frank. In Part II, the author discusses the concept of dynamic regulation of the financial services industry. Part Ill outlines possible implementation alternatives for dynamic regulation with a focus on contingent capital securities, deferred prosecution agreements, and corporate integrity agreements.