Briefing
Can orderly liquidation solve the problems of bailouts and bankruptcies?
Walter, John R.; Pellerin, Sabrina; Nash, Betty Joyce (2012-09)
In response to the financial crisis of 2007?09, Congress created the Orderly Liquidation Authority (OLA), a new regime for winding down systemically important financial institutions (SIFIs) that become troubled. The OLA provisions address two conflicting goals: mitigating threats to the financial system associated with bankruptcy and minimizing moral hazard associated with government bailouts. This Economic Brief compares OLA provisions to bankruptcy procedures. Although the OLA process could be quicker and more flexible than bankruptcy, it may not limit systemic risk without increasing moral ...
Richmond Fed Economic Brief , Issue Sep

Journal Article
Orderly liquidation authority as an alternative to bankruptcy
Walter, John R.; Pellerin, Sabrina (2012-01)
In response to the financial crisis of 2007, Congress created the Orderly Liquidation Authority (OLA) as part of its overarching financial regulatory reform bill, the Dodd-Frank Act. The OLA's provisions are aimed at simultaneously addressing two conflicting goals---mitigating systemic risk, which is thought to emerge when large financial firms enter the bankruptcy process, while also minimizing moral hazard, which arises when investors believe that firms are likely to be granted a government bailout to save them from bankruptcy and prevent systemic problems. In this article, we review the ...
Economic Quarterly , Volume 98 , Issue 1Q , Pages 1-31

Working Paper
The consolidation of financial market regulation : pros, cons, and implications for the United States
Wescott, Patricia E.; Walter, John R.; Pellerin, Sabrina (2009)
The U.S. financial system has changed significantly over the last several decades without any major structural changes to the decentralized financial regulatory system, despite numerous proposals. In the past decade, many countries have chosen to consolidate their regulators into a newly formed "single regulator" or have significantly reduced the number of existing regulators in order to form a regulatory structure that more closely mirrors the current financial system ? one that is increasingly dominated by large financial conglomerates. This paper reviews the advantages and disadvantages ...
Working Paper , Paper 09-08

Briefing
Assessing the Risks of Mortgage REITs
Walter, John R.; Pellerin, Sabrina; Sabol, Steven; Price, David A. (2013-11)
Regulators have expressed concern about the growth of a category of real estate investment trusts (REITs) that today invest primarily in mortgage-backed securities (MBS). These companies, known as mortgage REITs, or mREITs, have increased both in number and in asset size since the financial crisis, benefiting from federal guarantees and other support for MBS and from favorable regulatory treatment that allows high levels of leverage. While mREIT investors face significant risks, the level of risk that mREITs present to the financial system as a whole is unclear.
Richmond Fed Economic Brief , Issue Nov

Journal Article
MBS Real Estate Investment Trusts: A Primer
Sabol, Steven; Walter, John R.; Pellerin, Sabrina (2013-07)
This article examines those real estate investment trusts (REITs) that invest predominantly in mortgage-backed securities (MBS) and fund themselves with repurchase agreements (repos)---so-called mortgage REITS, or mREITs. mREITs grew quite rapidly after the financial crisis that began in 2008 and have come to be significant players in the MBS and repo markets. We review how they operate, how they are regulated, their recent growth, the risks they face, how they manage these risks, and the dangers they may pose to the broader economy.
Economic Quarterly , Issue 3Q , Pages 193-227

Journal Article
The consolidation of financial regulation: pros, cons, and implications for the United States
Wescott, Patricia E.; Walter, John R.; Pellerin, Sabrina (2009-04)
The U.S. financial system has changed significantly over the last several decades without any major structural changes to the decentralized financial regulatory system, despite numerous proposals. In the past decade, many countries have chosen to consolidate their regulators into a newly formed "single regulator" or have significantly reduced the number of existing regulators in order to form a regulatory structure that more closely mirrors the current financial system -- one that is increasingly dominated by large financial conglomerates. This paper reviews the advantages and ...
Economic Quarterly , Volume 95 , Issue Spr , Pages 121-160

Working Paper
mREITs and their risks
Sabol, Steven; Walter, John R.; Pellerin, Sabrina (2013)
This paper examines the history of mREITs and their broader role in the REIT industry. Additionally, it reviews how mREITs operate, how they are regulated, the risks they face, how they manage these risks, and the dangers they pose for the broader financial system.
Working Paper , Paper 13-19

Journal Article
Credit Unions: A Taxing Question
Pellerin, Sabrina; Marshall, Liz (2017-04)
A tax exemption has helped credit unions since the 1930s, but some argue they should be treated more like banks
Econ Focus , Issue 2Q , Pages 20-23