SUMMARY
Since July 2007, the developed countries faced the most serious and disruptive crisis after the 1929 Great Depression. As the crisis unfolded, policy authorities stepped in to support troubled financial institutions with large bailouts. This prevented a meltdown of the system, but at the cost of largest ever moral hazard, huge losses for taxpayers, shocks to fiscal sustainability, with probabilities of distress going up across sovereigns.Repair of financial regulation and supervision was necessary to reduce systemic risk and to achieve financial stability. Both in the EU and in the USA new frameworks have been and are being established. They share a common approach, based on a new regulatory agenda, stronger coordinated supervision – macro and micro prudential – and crisis management procedures. This paper offers a critical analysis of the two models of financial reform being enacted and points to weaknesses, notably in respect of effective, coordinated crisis management procedures. JEL Codes: G01, G2, G28