Fact and Fiction Behind Too Big to Fail

The Lord of Systemic Risk?

The Dodd-Frank bill of 2010 increased the political influence of the U.S. Treasury Secretary. He who occupies that position (and it’s been a male to date) has been granted major new powers under the bill.

The Treasury Secretary chairs Dodd-Frank’s Financial Stability Oversight Council, intended to oversee systemic risk and to serve as the regulatory overlord of all federal-level financial regulatory bodies. But he doesn’t just manage the Council’s agenda and run the meetings.

The Council’s voting members are the heads of regulatory bodies and senior government financial officials — ten people in total. However, the affirmative vote of the Chair — the U.S. Treasury Secretary — is required to add or remove financial institutions from the systemic designation. That means the White House has huge influence over systemic risk. The appointed Treasury Secretary could block additions and speed removals. This further politicizes financial market structure.

Fairy Tale Capitalism: Fact and Fiction Behind Too Big to Fail

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Was the mortgage debacle the sole cause of the financial bubble's collapse? Do you believe those who say the elimination of Glass-Steagall barriers didn't contribute to its building? Fairy Tale Capitalism: Fact and Fiction Behind Too Big To Fail places the mortgage mess into a broader perspective. It explains how the Federal deposit guarantee was married to investment banking's trading intensity, why the Fed had no choice but to bail out the biggest banks and how derivatives played a poorly-understood, but equally important role in the crisis. In simple terms Emily Eisenlohr walks with those who live on Main Street down Wall Street's darker alleys.

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