News and Commentary
Despite levying fines of over $20 billion in the past five years, the SEC has only collected about 55% of the amount owed. This discrepancy is largely due to litigation surrounding the fines, as the SEC cannot directly seize assets to pay for the fines.
Read this Politico interview with Mark Calabria, the new FHFA Director. He talks about conservatorship and GSE reform.
The financial sector is very interconnected, making “contagions” caused by distress at one firm likely to spread. A new paper seeks to quantify the risk of contagion by measuring the centrality of an institution based on exposure, funding, and credit risk.
New research shows that while deposit insurance and other safety nets do not increase the likelihood of financial sector shocks, they do increase the probability of a policy response to these shocks.
A paper analyzing the effects of cross-border bailouts finds that while promises of bailouts lower CDS spreads for both foreign and domestic banks, promises of bailouts positively effect the share value of only domestic firms.