Alex J. Pollock

AEI: Puerto Rico after Hurricane Maria

Taxpayers shouldn’t be asked to pay for Fannie and Freddie’s risk exposure

As the old Washington saying goes, “When all is said and done, more is said than done.” This certainly applies to the years of congressional debates about how …

Economics and politics are always mixed together

Sir, Mark Hudson (Letters, Oct. 3) is certainly correct that “economics is not a science." Nothing could be clearer than that! But he exaggerates in asserting that economics …

Why is Richard Cordray voting on FSOC?

The Financial Stability Oversight Council (FSOC) just made the good decision to remove the designation of the insurance company American International Group as a “SIFI” or “systemically important …

Real folks and the Fed

“What if Real People Ran the Fed?” (Up & Down Wall Street, Sept. 16). Great question. Another prime example of a noneconomist chairman in Federal Reserve history is Marriner …

Has Canada’s housing bubble finally reached bursting point?

The attached policy brief originally appeared in the Autumn 2017 issue of Housing Finance International, the quarterly journal of the International Union for Housing Finance. Both Canadian and foreign …

How does the United States rank in homeownership?

There are a lot of different housing-finance systems in the world, but the U.S. system is unique in being centered on government-sponsored enterprises. These GSEs—Fannie Mae and Freddie …

A wonderful confession

Adair Turner is an obviously very intelligent man who graduated from Cambridge University with a double first in history and economics and whose distinguished career has included being …

Treasury should not bail out Fannie and Freddie’s subordinated debt

When the U.S. Treasury bailed out Fannie Mae and Freddie Mac in 2008, holders of $13.5 billion in Fannie's and Freddie's subordinated debt—debt paid off after senior debt …

How big a bank is too big to fail?

The notion of “too big to fail”—an idea that would play a starring role in banking debates from then to now—was introduced by then-Comptroller of the Currency Todd …

Sovereign debt has a pretty poor record

Sir, “Nations have historically been the world’s best credits,” says your report “Supranational debt issuance on a high” (Aug. 10). This sanguine view is contradicted by Lex in …

Alan Greenspan’s ‘irrational exuberance,’ then and now

"The concept of irrational exuberance came to me in the bathtub one morning," Alan Greenspan recalled. On Dec. 5, 1996, in what became a famous speech at the American …

Fannie and Freddie face the moment of truth on their taxpayer bailouts

Almost nine years ago, in September 2008, Fannie Mae and Freddie Mac were broke and put into government conservatorship by the Federal Housing Finance Agency. Less than two months …

Virgin Islands follow Puerto Rico into the debt day of reckoning

What do Puerto Rico and the U.S. Virgin Islands have in common?  They are both islands in the Caribbean, they are both territories of the United States and …

Is the real estate double bubble back?

Average U.S. commercial real estate prices are now far over their 2007 bubble peak, about 22 percent higher than they were in the excesses of a decade ago, …

Bubbles, memory and governments

The attached policy short originally appeared in the Summer 2017 issue of Housing Finance International. It does not seem possible that in a reasonable let alone a rational world, housing …

The Fed’s mistakes? Let’s just go back to 1966

Niels Erich doubts my characterization of the Federal Reserve as capable of disastrous mistakes, adding “not that it has necessarily made any." In fact, it has made a …

The Fed should be required to provide Congress a regular savers’ impact analysis

Mr. Chairman, Ranking Member Moore and Members of the Committee, Thank you for the opportunity to be here today. I am Alex Pollock, a senior fellow at the R …

Presentation to IUHF World Congress

The attached presentation on the topic of federal government intervention in the U.S. housing market was delivered by R Street Distinguished Senior Fellow Alex Pollock at the 30th …

Fed is far too dangerous to be unaccountable

I would replace the headline of your editorial "An independent Fed had never been more crucial" (June 16) with a different thought: "Making the Fed accountable has never been …

The Fed: Can the world’s biggest S&L get back to normal?

The balance sheet of today’s Federal Reserve makes it the largest 1980s-model savings and loan in the world, with a giant portfolio of long-term, fixed-rate mortgage securities combined …

Housing risk

In the May 27 Up & Down Wall Street column (“Bitcoin and Tech Stocks: A 21st Century Tulipmania?”), Randall W. Forsyth sharply criticized the mortgage-interest deduction, but passed …

Glass-Steagall never saved our financial system, so why revive it?

The Banking Act of 1933 was passed in an environment of crisis. In March of that year, all of the nation’s financial institutions were closed in the so-called …

Even without Durbin Amendment repeal, Congress should pass the CHOICE Act

The following post was co-authored by R Street Outreach Manager Clark Packard. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, has done the yeoman’s work of putting together a …

Detroit and Puerto Rico: Which is the worse insolvency?

Over four decades beginning in the 1970s, the U.S. financial system had one big municipal debt crisis per decade.  These were New York City in the 1970s, the …

The Fed must be held accountable and the CHOICE Act will make it so

This week, the House Financial Services Committee passed Chairman Jeb Hensarling’s Financial CHOICE Act. Most of the public discussion of this bill is about its changes in banking regulations, …

Let’s get rid of Puerto Rico’s triple-tax exemption

Let’s ask a simple and necessary question: Why in the world is the interest on Puerto Rican bonds triple-tax exempt all over the United States, when no U.S. …

Puerto Rico’s inevitable debt restructuring arrives

"Debt that cannot be repaid will not be repaid" is Pollock's Law of Finance. It applies in spades to the debt of the government of Puerto Rico, which …

CHOICE Act would be major progress for financial system

Mr. Chairman, Ranking Member Waters and members of the committee, thank you for the opportunity to be here today. I am Alex Pollock, a senior fellow at the …

Data transparency and multiple perspectives

One question underlying the very interesting data project and proposed legislation we are considering today is the relationship of data transparency to multiple perspectives on financial reality. In …

FSOC is too political to be taken seriously

The Financial Stability Oversight Council is a political body masquerading as an analytical one. A dubious creation of the Dodd-Frank Act, it reflects that law's urge to expand …

Discussing the future of the GSEs on the Investors Unite podcast

I recently joined Investors Unite founder Tim Pagliara on the group's housing podcast for a broad-ranging discussion about what a future arrangement for Fannie Mae and Freddie Mac might look …

Colleges are acting like subprime loan brokers

Rana Foroohar, in “Dangers of the college debt bubble," points out a lot of problems with the U.S. student loan program, but misses the main point: the corruption …

What’s next for U.S. housing finance?

The attached policy study originally was published in the Spring 2017 edition of Housing Finance International. With the new administration of President Donald Trump, and simultaneous Republican majorities in …

Murphy’s Law and a banking career

Murphy’s law is well-known in the form: "Whatever can go wrong, will go wrong" and similar variations on the theme. But the intellectually interesting substance of Murphy’s law …

A flawed process generated by a flawed structure

Testimony to the Subcommittee on Oversight and Investigations U.S. House Committee on Financial Services Madam Chairman, Ranking Member Green and members of the Subcommittee, thank you for the opportunity to …

Low-rate blues

In asking “Is the Federal Reserve Using Overheated Data?” (Up & Down Wall Street, March 11), Randall W. Forsyth did the math: “If the Fed fulfills its own …

U.S. banks’ real estate boom could be signaling next crisis

Excessive real estate credit is the most common cause of banking booms, busts and collapses, throughout history, right up through the most recent financial crisis and around the …

What is the actual collateral for a mortgage loan?

“Economics and finance are like going to the dog races,” my friend Desmond Lachman of the American Enterprise Institute is fond of saying. “Stand in the same place and …

George Kaufman: 57 years of banking changes and ideas

57 Years of Banking Changes and Ideas Remarks at the Dinner in Honor of Professor George Kaufman’s Retirement Nov. 17, 2016 It is a great pleasure to be able to add …

What Dow 20,000 looks like in inflation-adjusted terms

The Dow Jones industrial average closing Jan. 25 at more than 20,000 inspired big, top of the fold front-page headlines in both the Wall Street Journal and the …

Letter to Financial Times: Borrowers and speculators benefit at savers’ expense

As your report “Fed balance sheet moves up agenda” makes clear (Jan. 19), the Federal Reserve’s quantitative easing experiment is still buying bonds and mortgage securities eight years …

The Cincinnatian Doctrine revisited

The attached policy study originally appeared in the Winter 2016 edition of Housing Finance International. Ten years ago, in September 2006, just before the great housing bubble’s disastrous collapse, …

The Federal Reserve is the bank most in need of a stress test

Do you know a bank that is leveraged at more than 100:1-to be exact, with assets of 111 times its equity? You do: it's the Federal Reserve. The consolidated …

The housing bubble renewed?

Average U.S. house prices are back over their 2006 bubble top, as measured by the Case-Shiller Home Price Indices. “Home Prices Recover Ground Lost During Bust” read the …

The Fed should be accountable for its results

“Vote Brings Uncertainty for Fed” (U.S. News, Nov. 10) says that President-elect Donald Trump might work with Congress to rewrite the laws governing the Fed’s structure. Good idea. …

Household incomes can fall even when everyone’s getting richer

One of the politically hottest statistics right now is median household income, especially its slow growth. But there is a big problem with understanding what this statistic means, …

GDP per-worker vs. GDP per-capita

We have previously compared the growth in real per-capita gross domestic product between the United States and Japan and among the 10 largest advanced economies. Growth in GDP …

Letter to Oversight Board of Puerto Rico

In response to your request for public comments on the draft Puerto Rico fiscal plan, I respectfully submit the following thoughts. An old friend of mine who ran a …

Barron’s Mailbag: Chapter 11 for Social Security?

In their Other Voices essay, Dudley Kimball and Robert Morgan said that Social Security will be insolvent in 2034. In the sense of having liabilities vastly greater than assets, …

Why current asset prices are dangerously exaggerated

Over the long term, real per-capita household net worth in the United States has grown at about 2 percent a year. This is a wonderful achievement of the …

Growth in per-capita GDP: How does the United States rank?

Growth in gross domestic product after adjustment for inflation (real GDP) is the most frequently reported and discussed economic measure. More important, however, is how people on average …

The Puerto Rico Drama Has a Long Way to Run

On October 14, the outgoing Governor of Puerto Rico, Alejandro Garcia Padilla, who is not running for re-election next month, addressed the Oversight Board which is charged by …

Homeownership Rates: It depends on whether you are married

The attached piece originally appeared in the Autumn 2016 edition of Housing Finance International. American political rhetoric endlessly repeats that homeownership is part of the “American Dream.” So …

Fed’s mandate is to ensure stable prices

Sir, Michael Brownrigg (Letters, Oct. 4) makes a common, but fundamental, mistake in claiming that the Federal Reserve’s mandate includes “low inflation”. To the contrary, in the governing …

‘Fin’ versus ‘tech’ in fintech

Financial technology – or "fintech," in the modern parlance – may be seen as trendy, but computing technology has strongly influenced banking and finance for decades. Its effects …

Happy birthday, TARP!

Today, Oct. 3, is the eighth anniversary of congressional passage of the act that created the famous or notorious $700 billion bank bailout program in the midst of …

Negative rates aren’t working. Why do central banks persist?

The following op-ed was co-authored by Paul Kupiec, a resident scholar at the American Enterprise Institute. Monetary policies in Europe and Japan have produced trillions of dollars of bonds …

The Credit Crunch of 1966: An instructive 50th anniversary

It’s the 50th anniversary of the Credit Crunch of 1966, which roiled financial markets in August and September of that year. Group financial memory fades, so if you …

Taking on Leviathan

Thomas Hobbes (1588-1679), the great philosopher of the authoritarian state, in a famous metaphor portrayed the government as a dominating giant or Leviathan, animated by absolute sovereignty, and …

The new century brings remarkable downshift in per-capita GDP growth

For the half-century from 1950 to 2000, U.S. real gross domestic product per capita grew at an average rate of 2.22 percent per year. For the first 15 …

Economic reform for Puerto Rico

The attached letter was submitted to the Bipartisan Congressional Task Force on Economic Growth in Puerto Rico. Among the most fundamental of Puerto Rico’s many economic problems is that it …

Japan versus the United States in per-capita GDP

We often see and hear in the media about the “stagnation” of economic growth in Japan. Let’s look at the numbers and see how Japan has done compared …

Iron Chancellor was a good actuary too

Sir, “Retirement age for young Germans will have to rise to 69, central bank warns” (Aug. 16). That is a quite reasonable, even generous, retirement age if you …

‘Commercial’ bank is misnomer. ‘Real estate’ bank is more apt

Comparing banking in the 1950s to today, we find giant changes that surely would have astonished the bankers of that earlier time. What's the biggest and most important …

When is the next financial crisis due?

House prices, commercial real estate prices, stock prices and bond prices are all very high. Remarkable asset-price inflations have been induced by the low, zero or negative interest-rates …

OFR points to low interest rates without mentioning the Fed

In the July 2016 edition of its Financial Stability Monitor, the U.S. Treasury Department's Office of Financial Research (OFR) points out multiple times that exceptionally low interest rates …

Who will pay for the Pension Benefit Guaranty Corp.’s huge losses?

The government's pension insurance company, the Pension Benefit Guaranty Corporation (PBGC), is broke. Because its creditors can't demand their money immediately, it won't have spent its last dollar for …

Negative real interest rates are politics

In a recent Wall Street Journal piece, Jason Zweig cites Harvard's Carmen Reinhart as rightly pointing out that "low interest rates will keep transferring massive amounts of wealth …

Housing Finance: Two strikes, and now?

Memories fade. So while trying to draw conclusions about going forward, we should also do our best to remember our past expensive lessons in politicized housing finance. It should …

Testimony to House Financial Services Committee on the CHOICE Act

Mr. Chairman, Ranking Member Waters and members of the committee, thank you for the opportunity to be here today. I am Alex Pollock, a senior fellow at the …

Seven steps to housing-finance reform

The attached policy brief appeared in the Housing Finance Reform Incubator report published in July 2016 by the Urban Institute. The giant American housing finance sector is as important politically …

In tracking homeownership, marriage matters

The following op-ed was co-authored by Jay Brinkmann, retired chief economist of the Mortgage Bankers Association. Homeownership long has been considered a key metric for economic well-being in the United …

Mismatch has led us into trouble many times before

Financial events cycle and financial ideas cycle. Here the United Kingdom is again, with real estate generating financial stress. As Patrick Jenkins rightly points out (“Open-ended property funds …

The perfect antidote to Dodd-Frank

To overhaul the Dodd-Frank Act, here is a radical and really good idea from House Financial Services Committee Chairman Jeb Hensarling, R-Texas. The Financial CHOICE Act, Hensarling's bill, says to …

Why can’t the US reform its housing-finance sector?

The attached policy brief appeared in the Summer 2016 edition of Housing Finance International, the quarterly journal of the International Union for Housing Finance (IUHF). It is sobering to …

A Fourth of July reflection on Brexit

When in the course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another, and to resume among …

Brexit: A summary

When Britain first at Heaven's command Arose from out the azure main, This was the charter, the charter of the land And guardian angels sang this strain: Rule …

The Senate needs to pass the House’s Puerto Rico bill

The government of Puerto Rico is broke. It now has multiple defaults on its record, most recently for $367 million in May. More and bigger defaults are on …

Power, independence and guessing

The Power and Independence of the Federal Reserve is an informative and provocative history of the Fed and its remarkable evolution over a hundred years’ time: a complex …

The PBGC: A broke insurance company sponsored by your government

Imagine an insurance company with assets of $88 billion, but liabilities of $164 billion. It has a huge deficit: a net worth of a negative $76 billion, and …

Does the Federal Reserve know what it’s doing?

The attached policy study was published in Cato Journal,  Vol. 36, No. 2. The Federal Reserve is the most financially dangerous institution in the world. It represents tremendous systemic risk—more …

How high are real house prices?

“Home prices are back to near-record highs across the U.S.” declared the Wall Street Journal in a June 1 front-page story. They are, indeed, when measured in nominal …

Time for Congress to vote in the new Puerto Rico bill

A revised bill to address the intertwined debt, fiscal and economic crises of Puerto Rico has just been introduced in the U.S. House. H.R. 5278 proposes "to establish …

Puerto Rico: A big default—what next?

Rexford Tugwell, sometimes known as “Rex the Red” for his admiration of the 1930s Soviet Union and his fervent belief in central planning, was made governor of Puerto …

Risk doesn’t stand still

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe explores the movement and transformation of risks in adapting, self-referencing systems, of which financial systems are …

Where is OCC in court battle over state usury limits?

The following op-ed was co-authored by William M. Isaac, senior managing director and global head of financial institutions at FTI Consulting. A surprising decision of the Second Circuit Court of …

Puerto Rico: Time for Congress to act

The finances of Puerto Rico's government are unraveling rapidly. With the commonwealth government broke and scrambling, its Legislative Assembly already has empowered Gov. Alejandro García Padilla to declare …

Searching for loyalty and prudence

In his provocative and knowledgeable new book, Other People’s Money: The Real Business of Finance, John Kay considers the complex ways that financial systems operate in between the …

Puerto Rico bill proceeds with oversight board and no bailout

The House Natural Resources Committee is taking testimony today on its bill to address the Puerto Rico debt crisis, and could send a finished bill to the full …

Court’s rebuke to FSOC was well-deserved

Patrick Jenkins, in “MetLife ruling poses threat to drive towards global financial stability” (Inside Business, April 5), says that the court’s decision in the MetLife case is “a …

Seven steps to housing finance reform

The giant American housing finance sector is as important politically as it is financially, which makes it hard to reform. From the 1980s on, it was unique in …

Update on U.S. property prices in the Fed’s brave new world

  The attached policy short was published in the Spring 2016 edition of Housing Finance International, the quarterly journal of the International Union for Housing Finance. Readers of my last …

On Puerto Rico, Congress is moving in the right direction

The draft bill to address Puerto Rico’s debt crisis – released late last week by House Natural Resources Committee Chairman Rob Bishop, R-Utah – marks a step in …

Your retirement dream may require working much longer

A recent Citigroup monograph, "The Coming Pensions Crisis," begins with some questions very much in the spirit of our time:  “What’s your dream for retirement?  Is it living …

MetLife decision a win for constitutional government, loss for ambitious bureaucrats

Do the bureaucrats who run government agencies long to increase their power?  Are they ambitious to extend their reach over private institutions and citizens?  Of course they do …

Fannie and Freddie and the 10% moment

The U.S. Treasury began rescuing Fannie Mae and Freddie Mac in September 2008, ultimately pumping $187.5 billion into the two mortgage giants. In return, it received new issues …

Sizing up the FCIC report five years later

Ongoing debates about the financial crisis of 2007 to 2009 keep reminding us that economics is not a science. It can’t be used by governments to manage economic …

The reductio ad absurdum of central banking

Common sense once held that negative interest rates were absurd and impossible. But the European Central Bank has just made its once unprecedented negative deposit rate even more …

Barron’s Mailbag

The Feb. 27 Editorial Commentary (“Money Yields to Progress: Cash Is Obsolete”) mentioned that in 1950 a penny still had value—at least that of a penny candy. But …

Sixteen years later, just how ‘bubbly’ was the tech-bubble peak?

Today marks the 16th anniversary of the very top of the notorious tech-stock bubble, which in retrospect, was truly remarkable for its illustration of “irrational exuberance." On March 10, …

The next crisis will come; Is your bank ready?

Banks, and credit unions, too, are loudly objecting to the Financial Accounting Standards Board's attempts to increase loan loss reserves. They have "slammed the FASB," in The Wall …

The courage to gamble

Ben Bernanke’s new book, The Courage to Act, demonstrates throughout its 579 pages the fundamental uncertainty faced by central bankers, Treasury officers, and everybody else when dealing with …

Countries don’t go bankrupt? The 20th century proves otherwise

How risky is sovereign debt? One memorable answer, "Countries don't go bankrupt," is attributed to Walter Wriston, the most prominent banker of his day and the chairman of Citibank …

A reversal of belief in central banks is healthy

Sir, John Plender bemoans central banks’ waning credibility (Insight, Feb. 17). In fact, belief in central banks was foolish in the first place and its reversal is healthy. …

The temptations of housing finance bubbles

A version of this policy short originally appeared in the Winter 2015 issue of the journal Housing Finance International. Running up the leverage is the snake in the housing …

Cloudy crystal ball

The Federal Reserve, that alleged master of financial “systemic risk,” completely failed to forecast the biggest credit event of current times: the collapse in oil prices. Of course, …

Puerto Rico needs a financial control board

The government of Puerto Rico is broke. Having run a long series of constant budget deficits, financed by escalating borrowing, it has accumulated about $71 billion in debt …

How to fix Fannie and Freddie

This op-ed was co-authored by James K. Glassman, a former under secretary of State and a visiting fellow at the American Enterprise Institute. In the midst of the financial panic …

The definition of SIFIs must Include Fannie Mae and Freddie Mac, the Federal Reserve banks and Open Market Committee and large federal credit programs

The attached policy study, offered as a response to MIT Center for Finance and Policy's SIFI Contest, was co-authored by Thomas H. Stanton of the American Enterprise Institute. The Financial Stability …

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