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Author:Frame, W. Scott 

Working Paper
Fiscal Implications of the Federal Reserve's Balance Sheet Normalization

The paper surveys the recent literature on the fiscal implications of central bank balance sheets, with a special focus on political economy issues. It then presents the results of simulations that describe the effects of different scenarios for the Federal Reserve's longer-run balance sheet on its earnings remittances to the U.S. Treasury and, more broadly, on the government's overall fiscal position. We find that reducing longer-run reserve balances from $2.3 trillion (roughly the current amount) to $1 trillion reduces the likelihood of posting a quarterly net loss in the future from 30 ...
Finance and Economics Discussion Series , Paper 2018-002

Discussion Paper
Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization

This Note summarizes analysis conducted in our recent FEDS working paper that seeks to understand the fiscal implications of the Federal Reserve's balance sheet normalization program.
FEDS Notes , Paper 2018-01-09

Discussion Paper
Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization

This Note summarizes analysis conducted in our recent FEDS working paper that seeks to understand the fiscal implications of the Federal Reserve's balance sheet normalization program.
FEDS Notes , Paper 2017-01-09

Working Paper
Debt maturity, risk, and asymmetric information

We test the implications of Flannery's (1986) and Diamond's (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data on over 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond's model and with much of the empirical literature. Our findings also suggest a strong quantitative ...
Finance and Economics Discussion Series , Paper 2004-60

Working Paper
Federal Home Loan Bank advances and commercial bank portfolio composition

The primary mission of the 12 cooperatively owned Federal Home Loan Banks (FHLBs) is to provide their members financial products and services to assist and enhance member housing finance. In this paper, we consider the role of the FHLBs' traditional product--"advances," or collateralized loans to members--in stabilizing commercial bank members' residential mortgage lending activities. ; Our theoretical model shows that using membership criteria (such as a minimum of 10 percent of the portfolio being in mortgage-related assets) or using mortgage-related assets as collateral does not ensure ...
Finance and Economics Discussion Series , Paper 2007-31

Working Paper
Credit scoring and the availability, price, and risk of small business credit

We examine the economic effects of small business credit scoring (SBCS) and find that it is associated with expanded quantities, higher average prices, and greater risk levels for small business credits under $100,000. These findings are consistent with a net increase in lending to relatively risky "marginal borrowers" that would otherwise not receive credit, but pay relatively high prices when they are funded. We also find that: 1) bank-specific and industrywide learning curves are important; 2) SBCS effects differ for banks that adhere to "rules" versus "discretion" in using the ...
Finance and Economics Discussion Series , Paper 2002-26

Journal Article
Estimating the effect of mortgage foreclosures on nearby property values: a critical review of the literature

In response to the wave of residential mortgage foreclosures in the past few years, federal, state and local government intervention programs have aimed to reduce the presumed social costs of foreclosures. Before the recent crisis, there was little economic research documenting foreclosure spillover effects. ; This article takes a critical look at the recent literature that seeks to estimate the negative effects of residential mortgage foreclosures. This review suggests that foreclosed properties sell at a discount, likely because such properties are in worse condition than surrounding ...
Economic Review , Volume 95 , Issue 3

Journal Article
Financing housing through government-sponsored enterprises

Three government-sponsored enterprises (GSEs)-Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System-were created to improve the availability of home mortgage financing by supplementing local funding. But today's more evolved financial markets enable retail lenders to tap national markets. Thus, the main contribution of the three housing GSEs has become providing homebuyers an interest rate subsidy that is made possible by the GSEs' special relationship with the federal government. ; This article examines the economic issues arising from the provision of such subsidies via the housing ...
Economic Review , Volume 87 , Issue Q1 , Pages 29-43

Journal Article
Federal Home Loan Bank mortgage purchases: Implications for mortgage markets

The Federal Home Loan Bank (FHLB) System is a government-sponsored enterprise created by Congress to support residential housing finance. Historically, the twelve regional wholesale banks that constitute the FHLB System have pursued this goal by making loans to their depository institution members secured by residential mortgage loans. In 1997, however, the Federal Home Loan Bank of Chicago began purchasing pools of conforming mortgages under its Mortgage Partnership Finance Program. Today, nine FHLBs offer this program, and the remaining three offer their own Mortgage Purchase Programs. ; ...
Economic Review , Volume 88 , Issue Q3 , Pages 17-31

Journal Article
Commercial bank profits in 1993

Economic Review , Volume 79 , Issue Jul , Pages 22-41


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