As debates mount in the U.S. over how best to regulate the financial sector to address climate change, the potential harm from banking sector exposures to climate change has attracted considerable attention, while the potential benefits of equity markets seem largely ignored. In what follows, I discuss why those debating…

[Note: The version as of June 2, 2021 revises the method used to motivate the discussion.] In a recent blog-post, I discussed 1) why firms in certain industries (not just banks) may be deemed “Too Big to Fail” (TBTF), and 2) how higher equity capital requirements for TBTF firms could…

[Note: The version as of May 6, 2021 corrects an error in the calculation of the subsidy, elaborates on the discussion of the method used to calculate the subsidy, updates the empirical results and corrects a few minor typos in the text.] After the 2007–2009 crisis, global initiatives led in…

With the COVID-19 pandemic and ensuing government-mandated shutdowns of commerce bringing economic activity in many sectors worldwide to a grinding halt, we see adversely affected large corporations seeking what amount to bailouts. Corporate bailouts, of course, occurred during the 2007–2009 crisis and catalyzed public outrage. But perhaps that outrage reflects…

In my previous blogpost, I showed that the parts of the Code of Federal Regulations (CFR) that concern the financial sector continued to grow in terms of complexity and verbosity through the first two years of the current administration. In what follows, I offer some preliminary perspectives on key drivers…

During the last ten years, we’ve lived through a banking crisis, an overhaul of the bank regulatory framework through the 2010 Dodd-Frank Act (DFA), and a revision of that overhaul through the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA). Over the last ten years the issue of…

Note: Edited November 28, 2018 November 12, 2018 marked the nineteenth anniversary of the enactment of the Financial Services Modernization Act of 1999, otherwise known as the Gramm-Leach-Bliley Act. The act is often associated with the repeal of the Banking Act of 1933, often called “Glass-Steagall” for short, which created…

Last year, I wrote a blog post in which I discussed my findings from a working paper that showed how the so-called “Recourse Rule,” a regulation that lowered bank holding company capital requirements for the financial products at the heart of the last crisis, could have contributed to the last…

Note: Edited on November 6th. Judging by recent headlines, you might think that the enactment of S. 2155, the “Economic Growth, Regulatory Relief, and Consumer Protection Act” (Pub. Law 115–174) means the door’s now open to a repeat of the crisis in 2007–2009. It’s hard to imagine how. …