March 23, 2018
When the Consumer Financial Protection Bureau finalized a rule regulating payday loans in October last year, I wrote that this could be the end of the road for millions of desperate customers who rely on these loans to get from paycheck-to-paycheck. It's now March 2018, and there aren’t many options left for these marginal consumers.
March 1, 2018
It is welcome news that our friends from the American Enterprise Institute, Heritage Foundation, and the R Street Institute put forth a plan this week for the Trump administration to take steps to downsize the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Noting the deadlock in Congress over GSE reform—even among Republicans—the plan looked exclusively at options that don’t require congressional authorization.
January 25, 2018
President Trump will deliver his inaugural State of the Union address next week, where he will outline the administration’s agenda for the coming year. Here are five financial reform priorities that the administration should champion.
December 19, 2017
The tentacles of the Beltway swamp were out in full force Tuesday morning—and it wasn’t for tax reform either. By a 10-13 vote, the Senate Banking Committee rejected former Rep. Scott Garrett’s nomination to chair the Export-Import bank, an agency he has labeled as embodying “the corruption of the free enterprise system.” Two Republicans, Sen. Tim Scott (R-SC) and Sen. Mike...
November 8, 2017
Today CEI is releasing my new study, “Fannie Mae and Freddie Mac Still Endanger the U.S. Economy.” In it, I discuss two issues that, on first appearance, seem to be in conflict, but in reality, can both be resolved according to free market principles.
October 27, 2017
What makes a bank risky?
While a simple question, the answer is anything but. As the 2008 crisis proved, managing risks in the financial system is far from straightforward and rarely easy to predict. What should be obvious, however, is that there is not a single magic aspect that pinpoints risk.
Yet, Congress has a different take. The Dodd-Frank Act of 2010 determined that there is a magic line – a bank’s asset size. Currently, any bank with over $50 billion in assets is considered a systemically important financial institution (SIFI) and faces heightened prudential regulation. As a result, many run-of-the-mill regional banks are regulated in a similar manner to trillion-dollar Wall Street firms.
Fortunately, a bipartisan bill that would reform the SIFI designation...
September 28, 2017
Nine years ago this month, the high-flying investment bank Lehman Brothers filed for bankruptcy, kicking off a financial crisis that would bring the system to the brink of collapse. It would surprise many Americans to know that the real causes of the financial crisis remain ever-present today. If anything, they have only gotten worse.
Conventional wisdom gets it all wrong—the notion that the crisis was a...
September 27, 2017
One of the criticisms leveled against regulators’ responses to the financial crisis is that new laws have done nothing to solve the moral hazard issue in the financial industry. Perversely, actions like the taxpayer bailouts of megabanks have only made the issue even more prevalent. In a...
September 19, 2017
It seems that in financial regulation, bad ideas tend to die hard. The idea that too much competition leads to financial instability is one of them. Popularized during the Great Depression, it has maintained its appeal in recent years as policymakers doubled down on the same regulatory approach that failed to mitigate the 2007-08 financial crisis.
August 9, 2017
Last week, the Office of the Comptroller of the Currency (OCC) announced that it will seek public comment on how to improve the Volcker Rule, a Dodd-Frank provision named after former Federal Reserve Chairman Paul Volcker. Controversial from its inception, both the Trump...