US residential real estate credit is one of the largest asset classes in the world, and it’s largely backed by taxpayers. Taxpayers fund or guarantee more than 90% of new mortgages. This arrangement is not only a government monopoly; it’s … read more
If you think the way to deal with too big/interconnected to fail/manage is by breaking up the megabanks, you have three basic options: 1) cap their size, 2) restructure them, 3) make them raise gobs of equity capital. In a … read more
UCLA researchers have found that leading up to the Financial Crisis, subprime lenders employed a novel method of influencing the political process. In addition to campaign contributions to key politicians, they gave special treatment to borrowers represented by key congressional … read more
A stunning note this morning from ace banking analyst Jaret Seiberg of Guggenheim Washington Research Group. Some of the key points (bold is mine): We believe it is now close to inevitable that regulators will adopt measures that go beyond … read more
Federal Reserve Governor Daniel Tarullo is the central bank’s regulation guy and has been giving some provocative speeches exploring how to end Too Big To Fail and reduce systemic risk. In a speech today, he suggests linking the amount of … read more
Banks used to have huge safety cushions, equity capital somewhere in the order of 20% to 30% of assets. Government didn’t tell them to do that. Those levels reflected what depositors and investors demanded. Then came a century of government … read more
From the New York Times, September 30, 1999: In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks … read more
This year marks the 100th anniversary of the legislation that created the Federal Reserve. At an AEI event on Friday morning, three all-star economists discussed a new conceptual framework for the Fed called market monetarism, a policy which they argue … read more
National Journal’s Catherine Hollander throws cold water on the idea that the recent nonbinding 99-0 vote to end “too big to fail” will result in a new wave of financial reform that will cap, shrink, or restructure the megabanks. She … read more
If you have a chance, please have a look at my National Review column for an update on some recent progress in ending government distortions in the US financial sector. One angle on the issue that I fail to mention … read more
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