Financial regulation The financial crisis that hit the world cannot be dissociated from the banking operations. Although some scholars have described the just-concluded economic meltdown as a “Minsky” moment, there are a number of key factors that indeed influenced the financial crisis. This explains why adequate regulation of the financial sector cannot be ignored by concerned government authorities. Perhaps, the New Deal offered a better framework for regulating the financial system. As it stands now, it might not be very clear on how financial regulation can be undertaken to minimize or even eliminate the possibilities of economic downturn (Kregel par. 5). The successful banking reforms that took place in the 1930s can be largely attributed to the attributes of the New Deal. The theory put forward by Minsky could not be dismissed as a momentous theory. It is crucial to mention that this theory offered the most comprehensive approach for controlling the activities of financial institutions. In a global environment which is highly liberalized, it might not be an easy task to streamline the operations of financial services. Nonetheless, the regulatory conditions can be adopted in advance so that all players in the financial sector are aligned to the operational requirements. Most of the changes executed by the proposals of the New Deal were highly structured and systematic. Long-term chronological changes should first be understood before the adoption of a particular framework for regulation. The Financial Services Modernization Act also injected many changes in the financial system. Scholars in the financial sector have attempted to explore major changes that took place since the New Deal era. The sources of these changes are also instrumental in discussing the global financial crisis. To some extent, internal processes eroded the New Deal reforms bearing in mind that protectionist measures were generally interfered with by commercial banks. The latter had express rights to take deposits from customers. In other words, commercial banks operated solely in the process of taking deposits. On the other hand, substitute instruments were provided by unregulated financial institutions. Growth of the financial sector The rapid growth of the financial sector in the contemporary economies cannot be doubted. Some critics argue that the financial sector has extremely grown to a level that regulators are no longer able to manage it (Smaghi par. 4). After the 2007/2008 financial crisis, some key players in the financial services sector saw the need to take a paradigm shift in order to avoid a similar occurrence and also cushion the affected business organizations. In a speech by Lorenzo, it is evident that monetary policies should be tightened across the board. Lack of regulation or poor regulation of the financial services sector was perhaps the main cause of financial crisis experienced across the world. In order to fast track sound monetary policies, it is crucial for commercial banks to adhere to three main factors. These include when to begin tightening the policies, the pace at which the tightening process should be carried and when to stop the entire strict regulation process (