Lessons from Bailout History II

On January 29, 2008, this Commentary covered lessons from previous bailouts worldwide. While I thought the topic was appropriate then, and focused on that topic in my Hudson Institute presentation of February 12, 2008, we have since seen the bailout of Bear Stearns and serious concerns about Lehman and – this week – the GSE’s, […]

Margins vs. Stability

The overall problem of today’s markets is one of conflicting incentives: custom products yield fat margins for investment banks while presenting the capability for widespread systemic risk. Hence, if innovators get lazy they sow the seeds of their own demise. But regulators are not recognizing the shortcomings, either. The Federal Reserve Bank of New York […]

Resolution Strategies

While Washington pundits play parlor games pondering changes to the regulatory architecture, the real work of resolving failed assets is beginning. The fact that the work is beginning is not so much testimony to price stability nor a turning point, but merely to the fact that investors facing losses finally realize that the losses are […]

Complex Debt

This week, the Financial Stability Forum initiated discussions that could decreased banks’ ability to hold complex debt instruments on their trading books. At issue is banks’ holdings of securities related to securitizations, in which the senior portions have already been sold but the junior portions have not. Sometimes, those junior portions were being aggregated in […]

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