Post-Modernism

The securities law are, essentially, remedial. Since the crash of 1929 precipitated the '33 Act and the '34 Act, financial scandals have preceded new laws.

Browsing through the titles of proposed securities legislation (see the spreadsheet) I saw language implying remedies on the way - "responsibility," "integrity," "reform" (twice) "transparency" (twice) and, "accountability" (three times).

Looking back, I noticed that the laws that get blamed for causing the financial crisis described themselves with the word "modernization" - The Commodity Futures Modernization Act of 2000 (CFMA) and Gramm-Leach-Bliley, or the Financial Services Modernization Act of 1999 (GLB).

Because I'm curious that way, I decided to use the federal securities legislative history database (FSEC-LH) on Westlaw to see if modern has always stood for less regulation and "reform" for more.

Forms of the word modernize appear only 31 times in FSEC-LH. The first occurrences are recent and are associated with stronger regulation. The Senate Report (S Rep 101-300) accompanying The Market Reform Act of 1990 says the law addresses "a number of critically important areas where legislation is needed to modernize the SEC's authority to protect investors." In his signing statement for the Futures Trading Practices Act of 1992 (FTPA, 1992 WL 457484), which reinforced the Commodity Exchange Act, George Bush describes FTPA as a "modernization of our financial laws". When modernization next raises its visage it is associated with the Financial Services Competitiveness Act of 1995 (HR Rep 104-127) - the first draft of GLB. The word eventually makes its way to the title; to the CFMA and then it vanishes.

Transparency and accountability appear to be analogous to modernization. They haven't previously been used in the titles of securities bills.

Starting in the late 1980's the titles of securities bills start to change from being purely descriptive, Securities Act, to something a bit more aspirational, Securities Litigation Uniform Standards Act. This is part of a general trend. Before the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) the word reform does not appear in any bill titles, but following the collapse of the savings and loan system and the stock market crash of 1989 there's a string:

* The Penny Stock Reform Act (PL 101-429)
* The Market Reform Act of 1990 (PL 101-432)
* The Limited Partnership Rollup Reform Act (PL 102-254)
* The Government Securities Reform Act (PL 102-722)

All of laws listed above strengthened securities regulation.