How Regulation Subsidizes Big Finance
In any search for policies that slow growth and drive inequality, financial regulation is an obvious place to start. After all, the financial sector was Ground Zero for the worst [...]
The Fed Increases Large Banks’ Capital Requirements
Yesterday, the Federal Reserve released the results of the 2018 Comprehensive Capital Analysis and Review (CCAR). As described in previous TCH’s posts, the 2018 results were crucially driven by the [...]
Large Bank Supervision: OCC Could Better Address Risk of Regulatory Capture
Banking regulators such as the Office of the Comptroller of the Currency (OCC) can implement policies to address the risk of regulatory capture. The objectives of these policies include reducing [...]
Central Banking for All: A Public Option for Bank Accounts
Among the perks of being a bank is the privilege of holding an account with the central bank. Unavailable to individuals and nonbank businesses, central bank accounts pay higher interest [...]
Bank Capitalization and Loan Growth
A few academic papers have recently indicated that banks with a greater amount of capital tend to lend more as a result of lower funding costs. This evidence has been [...]
Estimating How Basel III Liquidity Requirements Should Affect a GSIB Surcharge
This note proposes a recalibration of the global systemically important bank holding company (GSIB) capital surcharge that takes into account the impact of the liquidity coverage ratio (LCR) – one [...]
Strengthening the Regulation and Oversight of Shadow Banks
This report starts by outlining the lax oversight of nonbank financial companies and the systemic-risk regulatory gaps that existed before the 2007–2008 financial crisis. Next, the report charts the development [...]
Comprehensive Capital Analysis and Review 2019: Assessment Framework and Results
This annual assessment consists of two primary components: The Dodd-Frank Act stress test (DFAST) is a forward-looking quantitative evaluation of bank capital that demonstrates how a hypothetical set of stressful [...]
Macroprudential Policy, Leverage, and Bailouts
Reliance on macroprudential tools is problematic in several ways. First, in spite of reforms to the regulation of bank capital, high leverage, regulatory complexity, and public-sector guarantees continue to be [...]
The Community Reinvestment Act in the Age of Fintech and Bank Competition
The Community Reinvestment Act (CRA) requires banks to lend to low- and moderate-income (LMI) households in the areas where they take deposits. But it has become obsolete. When the CRA [...]