One cheer for financial reform; more cheers could follow

he past week has seen important progress on legislative efforts for financial regulatory reform, including advances on both substantive and symbolic (but politically charged) issues.

Non-bank resolution is the most important substantive issue, and the agreement between Senate Banking Committee Chairman Chris Dodd and Ranking Member Richard Shelby resolves (so to speak) defects of the original Dodd proposal that would have fostered bailouts.

In essence, non-bank resolution will now allow the Federal Deposit Insurance Corporation (FDIC) to provide collateralized lending to a failing non-bank financial firm but require a vote of Congress to intentionally deploy public capital. Losses on the provision of liquidity will be clawed back from creditors to the extent that these counterparties receive more than would have been the case in a liquidation of the firm through a Chapter 7 bankruptcy proceeding. In other words, government money can be provided if it is well-collateralized, but if there are inadvertent losses, the counterparties who benefit are on the hook and not some deep-pocketed institutions that might make good political punching bags.

Read the full article on American.com

Phillip Swagel is a visiting scholar at AEI

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Tuesday, September 16, 2014 | 5:00 p.m. – 6:00 p.m.
The Constitution as political theory

Please join us for the third-annual Walter Berns Constitution Day Lecture as James Ceasar, Harry F. Byrd Professor of Politics at the University of Virginia, explores some of the Constitution’s most significant contributions to political theory, focusing on themes that have been largely unexamined in current scholarship.

Wednesday, September 17, 2014 | 8:10 a.m. – Thursday, September 18, 2014 | 1:30 p.m.
Third international conference on housing risk: New risk measures and their applications

We invite you to join us for this year’s international conference on housing risk — cosponsored by the Collateral Risk Network and AEI International Center on Housing Risk — which will focus on new mortgage and collateral risk measures and their applications.

Thursday, September 18, 2014 | 2:15 p.m. – 3:00 p.m.
Speaker of the House John Boehner on resetting America’s economic foundation

Please join us as Speaker John Boehner (R-OH) delivers his five-point policy vision to reset America’s economy.

Friday, September 19, 2014 | 9:15 a.m. – 11:00 a.m.
Reforming Medicare: What does the public think?

Please join us as a panel of distinguished experts explore the implications of the report and the consumer role in shaping the future of Medicare.

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