BREAK ‘EM UP Reason #2: Dodd-Frank’s Resolution Authority is Too Little Too Late
After passing Dodd-Frank, Congressional leaders claimed both “no more bailouts” and that Dodd-Frank’s “resolution authority” was a primary tool in solving “too big to fail”. These two claims are polar opposites. The former states there will be no further government bailouts of big banks, and the latter involves strengthening the government’s ability to do just…
BREAK ‘EM UP Reason #1: Dodd-Frank Suffocates Both Commercial and Investment Banking
Congress may have removed Glass-Steagall barriers for all engaged in banking, but it sure didn’t create an even playing field. In fact, legislation in 1999 and 2008 suffocated two key financial sectors: investment banking and commercial banking. Comparing two giants from each sector — JPMorgan Chase and Goldman Sachs — shows how. Humans set the…
Derivatives and Too-Big-To-Fail Banks: Creating Systemic Risk
This speech was delivered to the New York Society of Security Analysts on December 3, 2104, as part of a conference on systemic risk. I’ve tried to insert the slides with the reader in mind. I was at the time chair of NYSSA’s Market Integrity Committee’s subcommittee on systemic risk, an extremely awkward role. 70%…
The Hidden Underbelly of the Auto Bailout
Candidates for President from both parties play to voters’ disgust for bailouts. On February 24th the Detroit News reported that President Obama’s campaign launched an ad in Michigan claiming the Republican candidates had turned their backs on GM. Mitt Romney has frequently publicly criticized the government auto bailout. In his January State of the Union speech President…