Since passage of the Economic Stabilization Act of 2008, the government has been explicitly and implicitly regulating the compensation of top managers at a number of U.S. banks.  In addition, bank regulators have added evaluations of bank management compensation packages to the list of factors taken into account in supervisory safety-and-soundness examinations...

On November 12, 1999, President Clinton signed the most significant piece of financial services regulation to be enacted since the Great Depression, at least up to that time. When the Financial Services Modernization Act of 1999, better known as the Gramm-Leach-Bliley Act (GLBA), was signed, the financial services industry faced strong pressures for deregulation...

The author reviews the legislative framework of financial regulation, assesses public and private sector accountability for the economic trauma loosed in 2008, and appraises the legislative aftermath.  His thesis is that the economy and the financial security of the country were unnecessarily jeopardized by the unchecked greed of a few...

This article asserts that, in dealing with the 2007-2009 financial crisis, the Federal Reserve Bank (Fed) has placed its role as monetary agency and de facto steward of the market for U.S. Treasury debt ahead of its statutory responsibility for ensuring the soundness of the private banks...

To be effective, programs of regulatory reform must address the incentive conflicts that intensify financial risk-taking and undermine government insolvency detection and crisis management. Subsidies to risk taking that large institutions extract from the financial safety net encourage managers to make their firms riskier, harder to supervise, and politically and administratively more difficult to fail and unwind...

The financial market events in September 2008 seem unprecedented in modern times. While other systemically important events happened in the last thirty years affecting U.S. markets, the one month turmoil and government response is without equal. As a result, insurance industry economists have been dusting off dictionaries and looking up what systemic risk really means... 

The causes of the financial crisis of 2007-09 are many and varied.  Indeed, the crisis may be viewed as the product of a perfect storm.  This paper identifies the major culprits or sinners of the U.S. crisis and enumerates their more important sins... 

In the debate over the proposed establishment of a new Consumer Financial Protection Agency, much attention has been given to discussion of whether consumers are irrational or incompetent and therefore need paternalistic regulators to look after them, and whether inadequate consumer protection regulation was a contributor to the financial crisis. Arguments over these questions are misplaced.

This paper reviews what economists have learned about Internet banking.  The paper begins by surveying evidence regarding the fundamental motivations for banks to offer services via the Internet and for their customers to utilize the services.  It considers the experience of and future prospects for so-called “pure-play” Internet banks that conduct virtually all dealings with their customers via the Web...

In recent years, the need for financial education has gained the attention of a wide range of entities including banking companies, government agencies, grass-roots consumer and community interest groups, universities, schools, and other organizations. Numerous factors have led to a complex, specialized financial services marketplace that requires consumers to be actively engaged if they are to manage their finances effectively...

Ever since severe turmoil enveloped the financial markets in the fall of 2008, commentators have blamed deregulation of the financial system, and specifically the supposed “repeal” of the Glass-Steagall Act by the Gramm-Leach-Bliley Act of 1999, for the crisis. This has led many to advocate a restoration of the separation of commercial and investment banking that was supposedly the essence of the Glass-Steagall Act...

Officials must show that they understand why and how the public's confidence in the federal government's ability to manage financial turmoil was lost. Leaders of the Treasury, Federal Reserve, and the U.S. Securities and Exchange Commission must face up...

As recovery from the present economic crisis begins, policymakers must address what reforms will be made in financial system in order to prevent the reoccurrence of a similar crisis in the future. What will Congress do in response? In terms of long-term financial reform, what is to be expected from Congress is passage of legislation...

This paper seeks to review events leading up to the financial crisis of 2008, including the massive government intervention into the U.S. financial markets, and then asks some questions and makes some recommendations about changes in specific areas of business practice...

Much work has been done in recent years on the subject of insurance regulation and capital requirements, and the process of regulatory reform will continue.  It behooves insurance supervisors to take a step back, revisit...

The Optional Federal Chartering (OFC) proposal introduced in the last session of Congress may have been the right bill for the introduction of federal regulation of the insurance industry at the turn of the 20th century.  However, the current OFC proposal shows...

This policy brief reviews recent studies that have sought to apply analysis of network externalities and the theory of two-sided markets to card payment networks, and it evaluates the public policy implications of this body of work.  Three general conclusions emerge...

The application of U.S. antitrust policy toward mergers in the banking industry is based on past research suggesting that there is a trade-off between adverse effects on consumer welfare...

This policy brief evaluates the banking and policy implications of 2006 Congressional legislation authorizing the Federal Reserve to pay interest on reserves held at Federal Reserve banks beginning in October 2011.  This upcoming policy change has received remarkably little attention...

Despite the considerable media attention given to the collapse of the market for complex structured assets that contain subprime mortgages,...

S. 40, the National Insurance Act of 2007, requires the development of a system of Prompt Corrective Action (PCA) for federally chartered insurers.  This paper discusses the issues associated with developing a system of PCA and makes recommendations...

Debates continue among Congressional members and industry leaders regarding the form of insurance regulation in the U.S. Regardless the form of regulation they support – state regulation, national regulation or optional federal chartering – they all agree that the insurance industry must be subject to close regulation/supervision...