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Working Paper
The consolidation of financial market regulation : pros, cons, and implications for the United States
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 ...
Journal Article
How large has the federal financial safety net become?
Legislative and regulatory actions taken in response to the financial turmoil that occurred between 2007-2009 expanded the extent to which financial institution liabilities were protected by federal government guarantees, i.e., these actions expanded the federal financial safety net. How large has the safety net become? Walter and Weinberg (2002) measured and examined the size of the safety net as it stood in 1999. We estimate the size of the safety net as of the end of 2009, after the creation of a number of government programs meant to back financial liabilities. We use methods similar to ...
Working Paper
Did the Financial Reforms of the Early 1990s Fail? A Comparison of Bank Failures and FDIC Losses in the 1986-92 and 2007-13 Periods
Two of the most significant banking reforms to come out of the banking problems in the late 1980s and early 1990s were the increase in capital requirements from Basel 1 and the prompt corrective action (PCA) provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). The PCA provisions require regulators to shut down banks before book capital becomes negative. We compare failures and FDIC losses on commercial banks in the pre-FDICIA commercial bank crisis of the mid-1980s to early 1990s with that in the recent financial crisis. Using a sample of community and ...
Journal Article
The 3-6-3 rule : an urban myth?
Journal Article
Can a safety net subsidy be contained?
Journal Article
The region's BHCs rank high
Briefing
Did Banking Reforms of the Early 1990s Fail? Lessons from Comparing Two Banking Crises
New Richmond Fed research on community and midsize banks evaluates the Federal Deposit Insurance Corporation Improvement Act (FDICIA) and Basel I by comparing failures in the 1986-92 period to those in 2007-13. Banks greatly increased commercial real estate lending between the two banking crises, but higher capital mitigated this risk. Failure rates in the recent crisis were mainly driven by the severity of the economic shocks. However, higher capital did not help contain FDIC losses, which were much larger in the recent crisis. One possible explanation is limitations in the accounting ...
Journal Article
What can price theory say about the Community Reinvestment Act?
Journal Article
Keeping SAIF safe
The insurance fund covering most savings institutions might not be as safe as its name suggests.