The primary focus of post-crisis financial regulation has been to make large bank holding companies – that is, banks and their non-bank affiliates – more resilient and resolvable. The former… Continue Reading
March 12, 2019
March 12, 2019
Banks and the Next Recession
WHEN THE NEXT RECESSION COMES, how will banks and the wider economy be affected? This is a timely question, given fears in the financial markets that one of the longest… Continue Reading
March 12, 2019
Expectations and Economics of Financial Crises
The collapse of the investment bank Lehman Brothers on Sunday, September 14, 2008, caught almost everyone by surprise. It surprised investors, who dumped stocks and brought the market index down… Continue Reading
March 12, 2019
The CECL Approach
EFFECTIVE IN 2020 for Securities and Exchange Commission registrant banks (and 2022 for private banks), U.S. generally accepted accounting principles (GAAP) will require banks to accrue for credit losses on… Continue Reading
March 12, 2019
Balancing Banking Regulation to Deal with Risky Lending and Runs
THERE IS A SURPRISING DISCONNECT between the theory that we teach about financial intermediation and the ongoing debates about how financial institutions ought to be regulated. In this essay, we… Continue Reading
March 12, 2019
FRB and FDIC Cast a Critical Eye on Resolution Plans
ON DECEMBER 20, 2018, the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC; together with the FRB, the Agencies) released their determinations regarding the 2018 resolution plans… Continue Reading
November 25, 2018
Bank Conditions Index Q2 2018
The Bank Conditions Index (BCI), which provides a summary measure of the condition of the U.S. banking system, rose in the second quarter of 2018, as shown in Exhibit 1…. Continue Reading
October 5, 2018
Ring-Fencing: Escape from the Prisoner’s Dilemma
#1: The big Implications of sPOE and MPOE Resolution Structures The development of resolution frameworks has revolutionized (or should revolutionize) many aspects of bank regulation. If the core purpose of… Continue Reading
October 4, 2018
The Post-Crisis Regulatory Tariff Regime
The regulatory and examination regime applied to foreign banks operating in the U.S. seems difficult to justify based on any historical experience or reasoned analysis.