Banking | AEIdeas

Tuesday, June 18, 2013

Image Credit: Medill DC (CC BY 2.0)

Economics, Financial Services, Pethokoukis

So now we know how Bernanke would break up the megabanks

James Pethokoukis | May 10, 2013, 12:03 pm

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 >

Economics, Financial Services, Pethokoukis

Washington finally waking up to Dodd-Frank’s failure

James Pethokoukis | May 6, 2013, 9:42 am

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 >

Economics, Financial Services, Pethokoukis

Fed governor outlines ‘another alternative for the break-up-the-megabank crowd’

James Pethokoukis | May 3, 2013, 2:27 pm

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 >

Pethokoukis

Cato’s weak critique of Brown-Vitter

James Pethokoukis | April 25, 2013, 1:48 pm

Cato’s critique of the Brown-Vitter TBTF, BUBB bill is confusing to me. 1.Cato assumes the goal is to prevent a repeat of the Financial Crisis. I see it as an effort to prevent a financial crisis, or at least protect … read more >

Economics, Financial Services, Pethokoukis

Senators Brown and Vitter offer a smart and simple plan to end Too Big To Fail

James Pethokoukis | April 25, 2013, 10:06 am

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 >

Economics, Financial Services, Pethokoukis

What Tim Johnson’s retirement will mean for ending ‘too big to fail’ and reforming the megabanks

James Pethokoukis | March 26, 2013, 10:24 am

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 >

Economics, Financial Services, Pethokoukis

The ‘break up the big banks’ movement inches forward …

James Pethokoukis | March 19, 2013, 2:44 pm

The WSJ’s Heard on the Street suggests that as the recovery strengthens and lengthens, the risk to mega-banks rises: There is growing talk among regulators, for example, of forcing banks to issue a minimum amount of long-term debt, cap the … read more >

Economics, Financial Services, Pethokoukis

Were those bank stress tests really this useless?

James Pethokoukis | March 13, 2013, 10:38 am

Recent Fed stress tests of the 18 largest US banks showed 17 have the capital base to withstand severe recession scenarios, including this bad boy: Reflecting the severity of the stress scenario–which includes a peak unemployment rate of 12.1 percent, … read more >

Pethokoukis

Should banks hold a lot more equity capital?

James Pethokoukis | February 15, 2013, 1:42 pm

One possible way to make big banks safer — in addition to downsizing them and/or restructuring them to eliminate government’s TBTF subsidy — is by making them fund their loans with more unborrowed money — equity capital. Banks may only … read more >

Credit: Benjamin Dumas (CC BY-NC-SA 2.0)

Economics, Financial Services, Pethokoukis, Regulation

GOP finally gets moving on shrinking Wall Street’s Too Big To Fail megabanks

James Pethokoukis | February 12, 2013, 1:09 pm

Here’s what the movement to break up the big banks, or BUBB, is: A pro-market, anti-crony capitalist effort to minimize the moral hazard and massive taxpayer liability potential created by Washington’s Too Big To Fail subsidy of America’s largest banks. … read more >