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.
It would be rational to evaluate the outcomes of all past decisions exclusively on their expected future payoffs and costs and not on the past, which should be irrelevant. Reality proves however that most people are not rational.
The list of the 25 biggest S&Ls in America in 1983, just three decades ago, contains many names which were famous in housing finance circles in those days. How many do you think still exist? Make your guess before you read the answer.
There is nothing in the least surprising about the failure and bailout of Banco Espírito Santo in Portugal. Anyone who has seen a few financial crises knows that one of their typical occurrences is for central banks and governments to offer assurances that things are all right, when in fact a disaster is approaching.
The power of bank living wills lies beyond what's written down on paper. Living wills are a gateway for regulators to change the company itself. If companies' living wills are not to regulators' liking, regulators can require the institutions to restructure, raise capital, reduce leverage, divest or downsize.
History shows that the FDIC cannot efficiently resolve a large bank unless it sells the bank to a larger healthy institution. Whole-bank purchase resolutions are what created many of today's "too-big-to-fail" institutions. The best use of annual Orderly Resolution Plans is to require the FDIC to plan for an efficient break-up of the largest banks in the FDIC bank resolution process.
The Dodd-Frank Act has failed to achieve its stated goals. Instead, evidence suggests that Dodd-Frank has reinforced investor’s perceptions that the largest financial institutions enjoy an extended government safety net. Rather than ending too-big-to-fail, Dodd-Frank’s provisions create new uncertainties around the resolution process for large financial institutions.
As implementation continues, it is increasingly clear that Dodd-Frank's unbalanced mix of new regulatory powers and vague goals are causing over-regulation and reducing economic growth.