Congress should investigate whether the FSOC and Fed believe their authority to regulate the shadow banking system derives from FSB directives; if so, language in Title VIII of Dodd-Frank could then permit them to issue the necessary regulations.
Bravo to MetLife for its legal challenge to the power-hungry bureaucrats of the Financial Stability Oversight Council. Can such a committee correctly foresee the future so it can control “systemic risk”? That is exceptionally unlikely.
What really caused the financial crisis? Peter Wallison argues it was housing finance policy and without changes, it could happen again.
Drawing from his new book, “Hidden in Plain Sight,” Peter Wallison contends that the 2008 US financial crisis was caused by government housing policies, not by insufficient regulation of the financial system or Wall Street risk taking.
“Hidden in Plain Sight” presents the compelling narrative that government housing policies caused the US financial crisis, challenging the Dodd-Frank Act and the claim that the financial crisis was caused by insufficient regulation.
There is a constant drum beat for additional regulation of asset managers, but where is the market failure?
In 2015, real estate prices will continue to increase while the Fed continues artificially low interest rates, and banks will succumb to the eternal real estate temptation once again.
The Dodd-Frank Act favors big banks and cities. Congress should amend it to help smaller banks compete in the new financial marketplace and prevent capital flight from small communities.
Just think about the ability to raise government-guaranteed deposits, so you can run at high leverage yourself, while using the deposits for highly leveraged real estate financing, especially when prices are rising rapidly —there you have the real estate temptation summed up.
A half-dozen highly credible studies debunked widely-held economic myths in 2014. Each of these studies illustrate the need to confront wishful thinking with a great deal of skepticism moving ahead into 2015.
Credit default swaps (CDS) are relatively simple insurance-like contracts that involve the same risks as products that we routinely expect banks to provide—commercial loans.