Predatory Lending and the Subprime Crisis
We measure the effect of an anti-predatory pilot program (Chicago, 2006) on mortgage default rates to test whether predatory lending was a key element in fueling the subprime crisis. Under [...]
Inconsistent Regulators: Evidence From Banking
We find that regulators can implement identical rules inconsistently due to differences in their institutional design and incentives, and this behavior may adversely impact the effectiveness with which regulation is [...]
The Boom, the Bust and the Future of Homeownership
This article investigates the boom and bust in U.S. homeownership rates over the 2000–2010 period. Using individual-level census data, we first estimate 204 homeownership regressions stratified by household age (21, [...]
Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program
We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizeable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented substantial [...]
The Origins of Banking Panics: Models, Facts, and Bank Regulation
Empirical research has demonstrated the importance of such institutional structures as branch bank laws, bank cooperation arrangements, and formal clearing houses, for the probability of panic and for the resolution [...]
The Misuse of the Fed’s Discount Window
I document the erosion of the historic restriction, at least since the 1930s, of Federal Reserve discount window assistance to liquidity-strained banks on the security of sound assets. Section 1 [...]
Financial Audit: Resolution Trust Corporation’s 1995 and 1994 Financial Statements
During the 1980s, the savings and loan industry experienced severe financial losses because extremely high interest rates caused institutions to pay high rates on deposits and other funds while earning [...]
Liquidity Risk, Liquidity Creation and Financial Regulation: A Theory of Banking
Both investors and borrowers are concerned about liquidity. Investors desire liquidity because they are uncertain about when they will want to eliminate their holding of a financial asset. Borrowers are [...]
Shaken and Stirred: Explaining Growth Volatility
This paper attempts to set forth a framework for thinking about growth volatility which is general enough to incorporate the important structural, institutional, and policy variations among countries which might [...]
The Three Pillars of Basel II: Optimizing the Mix in a Continuous-time Model
The on-going reform of the Basel Accord relies on three “pillars”: capital adequacy requirements, centralized supervision and market discipline. This article develops a simple continuous-time model of commercial banks’ behavior [...]