The list of the 25 biggest S&Ls in America in 1983, just three decades ago, contains many names which were famous in housing finance circles in those days. How many do you think still exist? Make your guess before you read the answer.
There is nothing in the least surprising about the failure and bailout of Banco Espírito Santo in Portugal. Anyone who has seen a few financial crises knows that one of their typical occurrences is for central banks and governments to offer assurances that things are all right, when in fact a disaster is approaching.
The power of bank living wills lies beyond what's written down on paper. Living wills are a gateway for regulators to change the company itself. If companies' living wills are not to regulators' liking, regulators can require the institutions to restructure, raise capital, reduce leverage, divest or downsize.
The Dodd-Frank Act has failed to achieve its stated goals. Instead, evidence suggests that Dodd-Frank has reinforced investor’s perceptions that the largest financial institutions enjoy an extended government safety net. Rather than ending too-big-to-fail, Dodd-Frank’s provisions create new uncertainties around the resolution process for large financial institutions.
As the great economist Joseph Schumpeter rightly said, “Capitalism not only never is, but never can be, stationary.” Of the ten largest banks in 1981, only two still exist as independent companies.
The Dodd-Frank Act (DFA) uses the phrase “systemic risk” 39 times without defining it. Because the term is ambiguous, the law allows the regulatory agencies wide discretion. The DFA directs agencies to draft and implement rules to control and minimize “systemic risk” without requiring the agencies to identify specifically what they are attempting to control or minimize.
While there is reason to be concerned that Basel III gives banks too much latitude, allowing capital regulation to be guided solely by stress tests is a mistake for a number of reasons.
Complaints about the FSOC arise because this agency has the extraordinary power to designate financial firms as systemically important financial institutions and there is very little evidence available anywhere that it has the ability or desire to use that power other than arbitrarily. Indeed, all the evidence is to the contrary.
We invite you to join us for two panel discussions on how Augustus created order from chaos 2,000 years ago, and what makes for durable domestic and international political systems in the 21st century.
Please join us for a book launch event and panel discussion about how a marketplace of education options can help today's students succeed in tomorrow's economy. Attendees will receive a complimentary copy of the featured book.
Please join us for a luncheon event in which our panel will discuss what conservatives can learn from how liberals talk and think about the safety net and where free-market economics, federalism, and social responsibility intersect to lift people out of poverty.