In the terrific conference on the Constitution in the Financial Crisis that Co-Conspirator Todd and I were privileged to attend last week at Stanford Law School, one of the panelists (this was a panel looking at the peculiar incentives and disincentives created for corporate governance by having government as a controlling shareholder, as in GM) […]
Archive | Financial Crisis
Did Dodd Read His Own Bill?
In the past few days there has been speculation that President Obama would name Harvard law professor Elizabeth Warren to be the interim head of the new Consumer Financial Protection Agency (CFPA) created by the Dodd-Frank financial reform legislation. What did Senator Chris Dodd think of this? TPMDC reports: In dismissing the rumor last night, […]
Systemic Risk, the Fed, and ‘Regulatory Casuistry’
With an eye to Ben Bernanke’s upcoming testimony to the Financial Crisis Inquiry Commission during the two days of hearings on “too big to fail” – in other words, systemic risk – the WSJ has an editorial in today’s paper raising various questions about the basis on which the Fed, the FDIC, and other agencies […]
David Zaring Offers a Comment on ‘Regulation by Deal’
In my earlier post from last night on the Dodd-Frank financial reform bill, I asked whether the highly discretionary provisions in the legislation addressing aspects of systemic risk have the effect of “returning” us to the 2008 crisis policy of “regulation by deal.” That term comes from a paper by Steven M. Davidoff and David […]
A Return to ‘Regulation by Deal’?
(Update: Thanks, Glenn, for the Instalanche! If readers want a further discussion of this, including a short response from one of the co-authors of the “Regulation by Deal” paper, David Zaring, go here. One reason to look at that further comment is that it gives an approximate definition of “regulation by deal” from the paper.) […]
Mallaby on Soros and the Pound, and Some Other Summer Reading in Philosophy and Economics
By Kenneth Anderson on June 7, 2010 10:01 am in Economy, Financial Crisis, Legal Professor, War and Armed Conflict
The Atlantic is running an excerpt from Sebastian Mallaby’s new book, More Money Than God: Hedge Funds and the Making of New Elite, which is out on June 14. The excerpt covers the famous moment when George Soros broke the pound in 1992. (It was then that I went to work for him, as general […]
How to Make the Bureau of Consumer Protection More Consumer Friendly:
From the beginning of the financial reg reform debate I’ve supported the idea of a more coherent and integrated institutional approach to consumer financial protection. I’ve also consistently argued that a failure of consumer protection was not a major cause of the financial crisis, misaligned incentives were the problem. In my view the two questions […]
More Musing on Liquidity and Solvency Distinctions in Sovereign Debt Crises
I want to return again briefly to how the traditional distinction of liquidity and insolvency in a crisis applies to sovereign states such as Greece. Liquidity is usually thought of as a gap in information that causes investors, creditors, depositors or others to suddenly question an institution’s financial position. In the classic bank run, the […]
The EU SPV
Anna Gelpern’s post on the Roubini blog (that I posted on earlier) had an interesting point I wanted to follow up. She remarks in passing, “apropos commitment, isn’t it interesting that the European Commission will issue collateralized debt (secured by its €141bn budget)?” Indeed, and even more interesting that the bulk of the bailout fund […]
Bankruptcy Reform Instead of Bailouts
Nobody likes bailouts, but what’s the alternative? Stanford economist John Taylor has an interesting op-ed in today’s WSJ suggesting that proper reforms of the bankruptcy code could reduce the need for the federal government to retain legal authority to bail out ailing financial firms. Here is the core of his proposal: During the past year […]
An Unwelcome Endorsement
According to The Hill, Goldman Sachs CEO Lloyd Blankfein endorsed the financial regulation reform legislation during his Senate testimony today. “I’m generally supportive,” Blankfein told the Senate Permanent Subcommittee on Investigations. Wall Street will benefit from the bill because it will make the market safer, Blankfein said. “The biggest beneficiary of reform is Wall Street […]
Contingent Convertible Debt
Many commentators have raised the idea of requiring banks and financial institutions to issue contingent convertible debt that can be converted to equity as a sort of pre-set form of re-capitalization in case of trouble. Greg Mankiw has said that it is his favorite idea in financial regulation reform. He has pointed to reports that […]
The SEC Split Over Goldman
The Washington Post has an interesting story on the 3-2 split on the Securities and Exchange Commission over whether to file charges against Goldman Sachs. According to the story, Republican appointees Kathleen Casey (a former Hill aide) and Washington Univeristy law professor Troy Paredes, “were skeptical that the evidence showed that Goldman had misled its […]
Derivatives Clearinghouses and Exchanges
Update: The Lincoln version of the derivatives legislation clears the Senate Agriculture Committee today (which raises another set of issues, different from the ones under discussion below): Democrats won the support of a senior Republican who voted in a Senate committee Wednesday for a sweeping overhaul of the market for derivatives, the complex financial instruments […]
The Goldman Fraud Suit
I’m sure many VC readers have been looking at the papers today, trying to sort out facts versus allegations, in the SEC suit against Goldman Sachs for fraud involving CDOs. The Wall Street Journal, New York Times, Washington Post, and Financial Times all have good stories, to take the papers from my front lawn. One […]