Can We Fix Too Big to Fail Without Shrinkage?
October 28, 2009

David Wessel has a column in today’s Wall Street Journal laying out three approaches to solving our Too Big Too Fail (TBTF) problem. The first two amount to different ways of “busting them up,” as Wessel puts it.

Worth Reading
October 27, 2009

Steve Levitt will be on the The Daily Show tonight. Are Asian economies already overheating? Still plenty of takers for Treasuries. FDIC interested in securitizing assets of failed banks. Temp-staffing demand picking up. Data-dump of the day: Pirate attacks in 2009.

Is Bernanke Making the Wrong Concession?
October 01, 2009

As I've said before, I admire the Fed chairman's political touch, which he demonstrated again today by making a key concession to Fed critics and skeptics: Apparently Bernanke is now willing to share power for keeping an eye on systemic risk with a council of regulators. It's the kind of thing people like FDIC chairman Sheila Bair have proposed, so that the Fed doesn't end up cornering the market on financial regulatory authority. I just wonder if this is the right concession to make. For one thing, I'm not entirely sure how a council of regulators is supposed to work.

Worth Reading
September 18, 2009

Should the FDIC tap banks or taxpayers for needed funds? WaPo: the FHA's reserves will soon drop below required levels. Megan McArdle puts chances of healthcare bill passing at 75%. Could criminal charges be filed in probe of BofA-Merrill deal? NYT banking reporter Eric Dash's view on problems with Wall St. pay. Reviews of business and economics news apps for the iPhone.

The Real Banker Boondoggle
September 17, 2009

Laurence Grafstein: What financiers owe the public.

What Was Sheila Bair Getting At?
September 06, 2009

I'm coming a little late to Sheila Bair's intriguing Times op-ed from last week, but I think Tim Fernholz basically got it right over at The Prospect: Bair wasn't kvetching about the administration's regulatory proposals--the kind of thing that got her in Tim Geithner's crosshairs a few weeks back. She was taking aim at even more radical proposals for regulatory consolidation, like what Sen. Mark Warner lays out here.  Basically, the administration wants to fold the underwhelming Office of Thrift Supervision (OTS) into the Office of the Comptroller of the Currency--the two agencies that regula

Worth Reading
August 31, 2009

NYT talks up TARP profits and WSJ warns of big FDIC losses. The pain of being a middle-aged former finacial-sector employee. How cities can prevent empty-storefront-ification. Men's underwear sales foretell a gradual rebound in spending. Did Hoover's generosity to workers cause the Depression? Justin Wolfers will have plenty of bedtime chatter tonight.

The Two-Track Economy Arrives
August 31, 2009

The notion of a two-track economy seems to be taking hold. We kicked the concept around pretty well last week--your 130 comments (as of this morning) helped clarify a great deal of what we know, don’t know, and need to worry about. The two-track concept overlaps with, and builds on, long-standing issues of inequality in the U.S., but it’s also different. Within existing income classes, some people find themselves in relatively good shape and others are completely hammered. New dimensions of differentiation are also taking hold within occupations and within industries--the WSJ this morning has

What Hath The Stress Tests Wrought?
July 15, 2009

The issue of the day is obviously CIT. It's hard to sort out the real news from clever PR/planted stories in this situation, but it looks like the FDIC is coming out strongly against being involved in a rescue package. Given Sheila Bair's successful political positioning and strong popular appeal, it's hard to see how--once dug in--the FDIC can be moved. The lobbying frenzy has concentrated on CIT's role in financing small and medium-sized business; "the recession will be deeper if CIT fails" is the refrain. This is a weak argument--it would be straightforward to refinance this part of CIT's b

Sheila Bair--not Doing It After All...
June 29, 2009

A few weeks ago I wondered how FDIC chairman Sheila Bair managed to retain/grab so much authority for her agency amid Obama's regulatory overhaul despite the fact that so many of her fellow regulators and senior members of Obama's economic team seemed to dislike her: The item was based on early reports about the administration's then-unreleased proposal--particularly the part about "resolution authority," which it looked like the FDIC was largely going to get. The Wall Street Journal ran a typical account here: The goal is to avoid repeating a situation akin to the collapse of Lehman Brothers