Daniel Tarullo on the history of financial regulation from the New Deal to Dodd-Frank.
Research from the Chicago Fed finds the prevalence of non-traditional mortgages (e.g. those with teaser rates or negative amortization) fueled the housing bubble in areas where increases in home prices weren’t driven by economic fundamentals, like wage growth.
News and Commentary
Read Michael Maiello’s summary of a paper on leverage-induced fire sales. The paper found that financial institutions that borrowed more heavily had a larger impact on the “downward spiral” associated with the 2015 Shanghai Stock Exchange crash.
Darrell Duffie on the failure of the pre-crisis financial regulatory regime. Various regulators failed to identify or address the root causes of the crisis, to wit leverage.