Commentary — Money, Banking and Financial Markets
Money, Banking and Financial Markets

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Posts tagged Financial market utility
Dodd-Frank: Five Years After

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereafter, DF), the most sweeping financial regulatory reform in the United States since the 1930s. DF explicitly aims to limit systemic risk, allow for the safe resolution of the largest intermediaries, submit risky nonbanks to greater scrutiny, and reform derivatives trading.

How to celebrate its fifth birthday? Well, if you are like us, it will be a sober affair, reflecting serious worries about the continued vulnerability of the financial system.

Let’s have a look at the most noteworthy accomplishments and the biggest failings so far. Starting with the successes, here are our top five:

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Steve Cecchetti and Kim SchoenholtzDodd-Frank, Financial regulation, SIFI, Capital requirements, Financial market utility, Single point of entry, CCP, Derivatives netting, Crisis prevention, Crisis mitigation, GSE, MMMFs, Repo, SEC, Regulatory arbitrage, Shadow banks, FSOC, CFPB, FIO, Volcker Rule, Living will, Credit ratings
Who does macropru for nonbanks?

A central lesson of the 2007-09 financial crisis is that we should be much more worried about financial intermediation performed outside the banking system. Even if banks are resilient, with capital buffers sufficient to withstand all but the largest shocks, other parts of the financial system can make it fragile. Indeed, making the banks safe may simply shift risk-taking elsewhere...

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Steve Cecchetti and Kim SchoenholtzMacroprudential regulation, Nonbanks, Capital requirements, Liquidity requirements, Stress test, FSOC, Regulatory governance, Financial market utility, Policy coordination