Increasingly, our regulatory structure has been adopting processes that are inconsistent with adherence to the rule of law. These process concerns are rarely voiced by academics, but that is a strange omission. Appropriate regulatory process is fundamental to the ability of regulation to succeed because process defines the incentives of regulators, which are crucial to ensure that regulators act diligently in pursuit of bona fide objectives. Relying on regulatory processes that avoid transparency, accountability, and predictability increases regulatory risk and is likely to lead to poor execution of regulatory responsibilities, as well as create unnecessary regulatory costs and opportunities for politicized mischief. This is not merely a theoretical concern. As I will show, because recent regulation has increased regulators’ discretionary authority, and has reduced the predictability and transparency of regulatory standards, it has reduced the accountability of regulators. This has already resulted in abuses that not only deform our democracy but also impose unwarranted costs on the financial system and distract from legitimate problems that should be the focus of prudential and consumer protection regulation.
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