The great financial crisis was caused in large part by complexity: complex products, complex institutions, and complex counterparty networks. Yet, post-crisis regulatory reforms designed to prevent future financial crises, principally Basel III, are equally complex. Sophisticated actors easily exploit complex systems, and large banks certainly are sophisticated – if nothing else. Several empirical studies have… Read More »
The Minneapolis Plan’s focus on the too-big-to-fail (TBTF) problem appears to conflate, or at least ignore, cause and effect. The TBTF problem is widely viewed as comprising two evils: that systemically important banks might engage in excessive risk-taking because they would profit by a success and expect to be bailed out by the government to… Read More »
Courtesy of Lee Reiners and John W. Matthews This past election day, voters in California, Maine,[1] Massachusetts, and Nevada voted to fully legalize marijuana, joining Alaska, Colorado, Oregon, and Washington as the only states in the union to permit the recreational use of marijuana. Rejoicing amongst legalization advocates has been tempered by the fact that… Read More »
