Yesterday I noted that the Basel Committee and the Financial Stability Board had issued reports challenging the complaints of bankers that stricter bank capital and liquidity rules and demonstrating the the proposed rules would make for healthier economic growth. I asked the question whether this might signal progress in banking regulation in the face...
The next “next thing” in finance is said to be covered bonds. These securities have a long and distinguished pedigree, originating under the rule of King Frederick the Great in order to generate mortgage financing for Prussia’s landed gentry, who had been battered by the Seven Years War. Historically used in European finance, covered...
Many banking leaders have been whining incessantly about how proposed new capital and liquidity requirements will adversely impact GDP and reduce credit. This is an old canard raised by almost every industry when facing new regulation. The logic is about as convincing as arguing against restricting drunk driving because this will reduce gasoline consumption....
Today the Treasury Department is hosting a summit designed to explore options for reforming the two housing giants, Fannie Mae and Freddy Mac. Addressing these government-controlled mortgage underwriting organizations is a task that has remained conspicuously absent from the financial reform process so far, even though both organizations, which have had a disastrous history...
The mystery unfolds. On Monday in “haunted houses,” I mulled over the question, why is it that many people believe that the $700 billion, Troubled Asset Relief Program (“Bailout”) of 2008 was authorized during President Obama’s administration. Today, I’d like follow up with some fascinating data from the Pew Research Center. Note that these...
Microfinance has become the rage of late, with its leading proponent, Muhammad Yunus, awarded the Nobel Peace Prize. Microfinance loans, an estimated $60 billion of which is outstanding, enable low-income individuals and the poor to start or expand small businesses. Until recently, most microfinance loans were made from funds provided by charitable donors. As...
Last Monday, August 2nd, I appeared on Ian Master’s Daily Briefing, a Los Angeles radio program. The main focus of our chat was why Elizabeth Warren is far and away the best choice to lead the Bureau of Consumer Financial Protection. Since that interview, I have been ruminating over a tangential question Ian Masters posed....
Readers may have noticed today’s WSJ article on a set of studies suggesting that the relationship between capital levels and the costs of loans is less significant than the banking industry contends. (Naturally, the Journal provides no links. I’m assuming the article is referring to this study by Kashyap, Stein, and Hanson and this...
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