Trust as a Reliance Interest: Administrative Law and Financial Regulation in the United States and its Comparative Implications

Abstract

This article argues that regulatory trust is established and maintained through a relationship between stakeholders and the government, with the former group of organizations and individuals relying on their understanding of this relationship. Federal administrative law in the United States makes the expectations about the regulatory environment on which stakeholders rely more meaningful by granting stakeholders the right to bring actions in court when their expectations are being (or seem likely to be) dashed. To make this argument, I begin with the threshold question of how courts serve as a forum for voicing claims of distrust in regulatory regimes. I then consider the importance of political accountability over regulatory decision making, illustrating the concerns about the structure of agencies that regulate consumer and housing finance. Next, I will discuss a second major challenge to trust that arises from the extent to which the authority of regulatory agencies is circumscribed by legislation. Along the way, I draw on the case law presented to argue that problems of trust in financial regulation center on the reliance interests of stakeholders. Finally, the argument suggests a research agenda into trust as a reliance interest that I sketch in the conclusion.