Unless the regulatory net spans all financial institutions comprehensively, the more regulations are beefed up, the more funds will flee from strictly regulated sectors to more loosely regulated sectors. 9  Blinder, A. S. (2009), “Six Errors on the Path to the Financial Crisis,” The New York Times, January 25, 2009.
10  Kashyap, A. K., and J. C. Stein (2004), “Cyclical Implication of the Basel II Capital Standards,” Economic Perspectives, 1Q/2004, Federal Reserve Bank of Chicago. 11  Rajan, R. G. (2009), “Cycle-Proof Regulation,” The Economist, April 8, 2009. BIS Review 74/2009  7  "Contingent" regulations have the following properties.