The Federal Reserve’s May financial stability is report. One interesting finding is the comparison of leverage between financial versus non-financial sector firms.
News and Commentary
BPI has a new blog post looking at some of the potential systemic risks coming from the mortgage market. They blame regulatory flaws for an increase in non-bank mortgage creation.
A proposal for the Fed to create a standing Repo facility has created a lot of buzz over the past few weeks. One of the original creators of the proposal, St. Louis Fed’s David Andolfatto, was on yesterday’s Macro Musing podcast to talk about what it would do to systemic liquidity.
In a letter to Congress, Fed Chairman Jerome Powell said that the Fed has prepared financial tools to be used in cases of climate change-induced weather disruptions. He said they weren’t concerned about Climate Change’s influence on monetary policy, but rather from a banking supervision perspective.
Steven Davis and John Haltiwanger have an interesting post in VoxEU that used US housing data to understand business creation. They argue that housing market fluctuations have major consequences on young firm hiring patterns.
Should we be worried about distressed banks over-leveraging themselves? A new paper argues that struggling banks make significant efforts to recapitalize and avoid gambles.
The IMF is out with a paper analyzing the global economic recovery from the 2008 crisis. They found that countries with systemic risks in their financial sectors pre-crisis saw slower recoveries than countries with safe financial systems.
Where does wealth come from? A new NBER paper looks at 1989-2017 and finds that shareholder rents account for over half of the growth in equity wealth with economic growth accounting for just 1/4th.