Will a Failed Megabank Be Liquidated? Don’t Bet On It

By | April 17, 2018

A vast literature has arisen discussing the tortured issue of taxpayer-funded bail-outs and the intimately related concept of ‘Too Big to Fail’ (TBTF). The idea behind it is relatively simple. TBTF describes a financial institution whose failure would cause such a tremendous level of harm to the economy that the responsible government will attempt to… Read More »

Blockchain is Overhyped

By | April 5, 2018

Courtesy of Lawrence Baxter, Ryan Clements, and John Lightbourne The buzz surrounding Blockchain, the distributed ledger infrastructure upon which Bitcoin operates, and how it will transform commerce while reducing transaction costs is at a crescendo. As John Oliver recently hilariously lampooned, many investors assign instant value to any firm with Blockchain in its name, mirroring… Read More »

The Effects of Cross-Border Cooperation on Enforcement and Earnings Attributes

By | March 28, 2018

Courtesy of Roger Silvers In a recent study, I investigate cross-border coordination among national securities regulators and its impact on enforcement and financial reporting. The paper provides an in-depth look at the cross-border enforcement program at the U.S. Securities and Exchange Commission (SEC), using publicly available data. The results are consistent with the IOSCO Multilateral… Read More »

What Should We Expect of Bank Directors? It Depends on Whom You Ask

By | March 21, 2018

Courtesy of Joseph A. Smith Jr. In August, the Board of Governors of the Federal Reserve (Fed) issued for comment a release entitled “Proposed Guidance on Supervisory Expectation for Boards of Directors” (Proposed Guidance).[1]  This note will briefly review the Proposed Guidance and the comments the Fed received on it.  I will focus primarily on… Read More »

How are Bond Yields Affected by a Firm’s Ties to the Federal Government?

By | February 13, 2018

Courtesy of Reza Houston Do bondholders benefit from connections with the federal government?  We know that in the United States, there is ample evidence political connections confer benefits on firms.  Firms which make PAC contributions, hire lobbyists, or employ former politicians are more likely to be bailed out[1], avoid enforcement[2], and receive lucrative government contracts[3]. … Read More »

If We Can, Does It Mean That We Should?  Volatility Linked ETPs and The Recent Crash

By | February 10, 2018

Market participants around the world are still reeling from this week’s wild ride that saw major U.S. indexes drop more than 5% and the Dow Jones Industrial Average swing by at least 1,000 points in all but one day. Early causal assessments pointed to the threat of rising interest rates and inflation, political uncertainty in… Read More »

Federal Reserve Consent Order Represents Worst Case Scenario for Wells Fargo Directors

By | February 6, 2018

Janet Yellen ended her tenure as Chair of the Federal Reserve with a bang last Friday when the Federal Reserve Board (the Board) voted 3-0 to issue a consent cease and desist order that imposes unprecedented sanctions on Wells Fargo for its phony-accounts scandal and other “widespread consumer abuses.” The primary sanction is a restriction… Read More »

Reflections on Payday Lending

By | February 5, 2018

Courtesy of Joseph A. Smith Jr. Regime change at the Consumer Financial Protection Bureau (CFPB) has involved, among other things, issuance of a statement of intention to reconsider a rule to regulate payday, auto title, and other high-cost short-term lending (the Payday Rule).  Payday loans are made for fees that, when calculated on an annual… Read More »

SEC Stands Firm Against New Bitcoin ETF Proposals

By | January 12, 2018

The New Year has seen the Securities and Exchange Commission break out its best Dikembe Mutombo finger wag impersonation for those seeking to list a Bitcoin related exchange traded fund (ETF). According to the SEC’s EDGAR database, seven different Bitcoin ETF proposals were withdrawn just this week at the request of SEC staff. The SEC’s… Read More »