Financial Markets

Congress helped create the CFPB’s leadership crisis. It can fix it.

Over the past few days, the D.C. news cycle has been dominated by the palace intrigue over who should be properly recognized as acting director of the Consumer …

Congress uses the Congressional Review Act to abolish another regulation

During the early months of the Trump administration, Congress and the president made unprecedented use of the Congressional Review Act to repeal regulations. The CRA, which was enacted …

Giant ‘QE’ gamble: How will it end?

The Federal Reserve made a colossal gamble with its so-called “Quantitative Easing” or “QE,” which is simply a euphemism for its $4.4 trillion binge of buying long-term bonds …

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 …

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 …

The Equifax Hack: Time to get serious about consumer data protection

What’s said about money can be said about data: No one treats other people’s information the way they treat their own. This week, Equifax—one of the "big three" consumer …

Testimony to USTR on NAFTA renegotiation

Chairman Gresser and members of the Trade Policy Staff Committee of the Office of the United States Trade Representative, thank you for the opportunity to testify today. My …

Effects of BAT on life insurance and annuities

The attached policy study was co-authored by R Street Senior Fellows Ian Adams and R.J. Lehmann. Descriptions of the formulas and regression models used to conduct this analysis can …

Regulatory harmonization between the United States and Canada

Renewed interest in regulatory reform in Washington is a necessary and positive development. A decadeslong accumulation of red tape and burdensome regulations imposes significant costs on the U.S. economy. …

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 …

Dual-class shares and the shareholder empowerment movement

The shareholder empowerment movement has renewed its effort to eliminate, restrict or, at the very least, discourage use of dual-class share structures—that is, classes of common stock with …

R Street commends passage of H.R. 10, the Financial CHOICE Act of 2017

WASHINGTON (June 8, 2017) – The R Street Institute praises today's vote by the U.S. House to pass the Financial CHOICE Act, legislation that begins to unwind the …

Embarrassment of Riches: Reversing U.S. minerals import dependency

The attached policy study was co-authored by R Street Senior Fellow Catrina Rorke. As recently as 1990, the United States was the world’s largest producer of minerals—a collection …

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. …

Dodd-Frank reform must include repealing the Durbin amendment

Many of us know what a "seven-year itch" is. Between the famous Marilyn Monroe movie of the 1950s and the legendary Roseanne Cash song of the 1980s, it …

R Street scholar says CHOICE Act represents win for transparency, economic growth

WASHINGTON (April 26, 2017) – The Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act, better known as the Financial CHOICE Act, would represent major progress for …

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 …

Pollock to speak at the 30th World Congress of the International Union for Housing Finance

R Street Distinguished Senior Fellow Alex Pollock will speak on a panel at the 30th World Congress of the International Union for Housing Finance. The conference is scheduled …

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 …

Let’s eliminate the SEC’s Investment Advisory Committee

Looking at the Securities and Exchange Commission’s Investment Advisory Committee as a proxy for the relative influence of the shareholder empowerment movement gives one the distinct impression that …

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 …

Accessory Dwelling Units: A flexible free-market housing solution

Much of the American built environment was constructed in the post-World War II era, when government policy and planning fashion favored a highly dispersed development model centered on …

Ukraine is silently leading a digital currency revolution

There’s a witticism sometimes used among Ukrainians: “may you be forced to survive only on your official salary.” The quip is both a tongue-in-cheek nod to the endemic …

12 organizations support rolling back harmful Consumer Financial Protection Bureau midnight regulations

Dear Member of Congress: We support H.J. Res. 73 because it will block the burdensome and disastrous new rules promulgated in the waning months of the Obama Administration by …

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 …

An Open Letter to House Financial Services: Repeal the Durbin Amendment

Dear Chairman Hensarling, On behalf of the undersigned free market organizations and taxpayer advocates, we write to urge you to maintain the provision that repeals the Federal Reserve’s price …

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 …

GOP tax plan could boost prices for Californians’ insurance

Donald Trump has only been president since Friday, so it’s too early to know what his “America first” policies will mean economically. But an ongoing debate from 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 importance of the business judgment rule

The business judgment rule, the most prominent and important standard of judicial review under corporate law, protects a decision of a corporate board of directors from a fairness …

California cities facing growing pension costs in new year

After two years of minuscule investment returns, the nation’s largest state pension fund – the California Public Employees’ Retirement System – has once again lowered its expected rates …

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 …

Moving forward on unwinding proxy access

The shareholder empowerment movement consists of activists who advocate shifting corporate decision-making authority to shareholders, and thus away from boards of directors and executive management. In effect, this …

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 …

R Street’s priorities for the next administration

The incoming Trump administration will inherit numerous challenges that must be dealt with in year one, such as overwhelming shortfalls in the Pension Benefit Guaranty Corp. and debt …

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 …

Corporate governance by the board, not the government

The following op-ed was co-authored by Michael Wilt, a senior policy writer and editor with the Mercatus Center at George Mason University. Starbucks recently made a big change to its …

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 …

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 …

Debating proxy access with substance, not bluster

There has been much bluster, but very little substance, in the ongoing debate over proxy access – that is, the ability of certain privileged shareholders to have their …

‘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 …

Ignoring pension past, state risks future problems

It’s one of the oldest ploys. After officials at a government agency or business are caught in an embarrassing situation, it’s typical for them to deny there’s anything …

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 …

Support H.R. 5983, the Financial CHOICE Act

September 22, 2016 Dear Representative, On behalf of the undersigned organizations, we write to express our support for H.R. 5983, the Financial CHOICE Act, introduced by Chairman Jeb Hensarling, R-Texas …

Planting mustard seeds in the heartland

This week, I'm taking part in a beta test for a new service that connects Columbus, Ohio's parking-space owners mostly with out-of-towners looking for a place to park …

Prop. 53 could have far-reaching consequences for state project financing – or not

Most California voters are unfamiliar with the inner workings of the municipal-bond process. Many are likewise unfamiliar with the differences between, say, “general obligation” bonds and “revenue” bonds. …

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 …

Four inconvenient truths about Fannie and Freddie

Americans have for years been addicted to long-term (that is, 15 to 30-year) fixed-rate residential mortgage loans. We just can’t live without them. The severity of this habit …

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 …

Creating a foundation for a substantive debate on proxy-access proposals

If shareholder proposals on proxy access—that is, the ability of certain large shareholders to have their own slates of nominees to corporate boards included in the proxy materials …

California push for coal divestment raises concerns

Unlike the sellers of most other products or services, insurance companies receive payments from their customers in exchange for future promises. If you wreck your car, they will pay …

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 …

California coal-divestment push mostly about politics

California voters in 1988 dramatically expanded the power of the state Department of Insurance and turned the insurance commissioner post into an elected position. The Proposition 103 initiative …

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 …

CalPERS’ earnings flop means belt tightening

Earlier this year, I watched in horror as my 401(k) earnings started a freefall right before I planned on shifting some assets into a lower-risk fund. Things corrected, …

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 …

Pollock testifies on CHOICE Act before House Financial Services

R Street Distinguished Senior Fellow Alex J. Pollock testified July 12, 2016 before the House Financial Services Committee about the CHOICE Act, legislation that proposes to loosen regulatory …

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 …

R Street to the Senate: Top 5 reasons to support PROMESA

With additional Puerto Rican defaults probable on July 1, just a week away, the U.S. Senate faces a pressing vote on how best to resolve Puerto Rico’s fiscal crisis. While no …

Even booming Bay Area sees an exodus

When asked whether he wanted to have dinner at a particular restaurant, Yogi Berra famously quipped, “Nobody goes there anymore. It’s too crowded.” It’s easy to apply that …

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 …

R Street and Americans for Tax Reform urge the Senate to pass H.R. 5278 (PROMESA)

June 21, 2016 Dear Senator, On behalf of the undersigned free market organizations, we urge you to vote “Yes” on the House-passed H.R. 5278, the Puerto Rico Oversight, Management, and …

Lavish pension hikes cause of O.C.’s exploding debt

The Orange County Grand Jury’s report on the state of the county’s pension plans painted a bleak but not unexpected snapshot of a challenging long-term fiscal situation. The …

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 …

Shareholders continue to be misinformed about the costs and benefits of proxy access

The California Public Employees' Retirement System (CalPERS) and the New York City Comptroller’s Office both continue to use a deeply flawed CFA Institute report as support for their …

Should the Fed act as the world’s central bank?

The need for public justification is a vital, if overlooked, check on power. If an institution cannot convincingly explain why it does what it does, consequences naturally will …

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 …

Pollock talks Puerto Rico on CCTV

R Street Distinguished Senior Fellow Alex Pollock was interviewed in a recent segment by CCTV America on the Puerto Rican debt crisis and steps Congress should take to …

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 …

Build a way out of high housing prices

If there were 30 loaves of bread and 50 people who wanted them, you can guess what would happen. Prices for those loaves would rise, from, maybe, $2, …

Harriet Tubman on the $20 bill? Hell yeah

Harriet Tubman is a good choice to replace Andrew Jackson on the front of the $20 bill. Jackson, the first Democratic president, is exactly the sort of overheated, …

A deeply flawed CFA Institute report on shareholder empowerment

The following oped was coauthored by R Street Senior Fellow R.J. Lehmann. Over the past year and a half, the shareholder-empowerment movement has been deeply enamored with an August …

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 …

Critiquing the CFA Institute’s report on proxy access

Is proxy access – that is, the ability of certain privileged shareholders to have their own slate of director nominees included in the proxy-solicitation materials public companies must …

Reimagining retirement for the gig economy

The emergence of the so-called “gig economy” – employment situations in which a worker may spread his or her labor among several part-time or freelance arrangements with several …

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 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 …

The tension between hedge fund activism and corporate law

The attached paper was presented at a Jan. 22, 2016 symposium honoring the work of Henry G. Manne, sponsored by the Law & Economics Center at George Mason …

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 …

Public-pension funds play with newest toy in corporate governance

Shareholder-wealth maximization generally is accepted as the default objective of an investment fund, though there are exceptions to the rule. For example, an investment adviser might create a …

Proxy Access: Shareholder democracy or creeping mercantilism?

Following certain rule changes made by Congress and the U.S. Securities and Exchange Commission, the 2015 proxy season has seen a deluge of shareholder proposals at U.S. public …

Freeing investor capital for small business

Something has gone wrong with small business in America. For the first time since statistics were kept, the rate of business failure now exceeds the rate of business …

Earthquakes and home mortgage risk

The United States faces severe earthquake risk in many areas of the country, yet consumers routinely choose not to purchase insurance products to cover this risk. Low earthquake …

Homesick: How housing tax breaks benefit the wealthy and create McMansions

Since its inception a century ago, the individual income tax code has been exceedingly generous to homeowners.  Homeowners may deduct the interest paid on up to $1 million …

Rethinking tax benefits for home owners

The attached piece, which appeared in the Spring 2014 issue of National Affairs, was co-written with Ike Brannon and Zackary Hawley. The individual income-tax code offers a multitude of …

Artfully resolving Detroit’s bankruptcy

The attached policy study was co-authored by R Street Midwest Director Alan Smith. For the first three decades of the 20th Century, Detroit was the second fastest-growing city in …

Government sources of systemic insurable risk

In mid-2013, three years after the Dodd-Frank Act's passage, American International Group Inc. and Prudential Financial Inc. became the first insurance companies to be designated by the Financial …

Resisting automatic savings

The automatic enrollment of new employees into a company’s 401k pension plan has gone from a niche policy to the mainstream in just a few years. Today, a …

Small business credit still a problem

PDF Download Text American small businesses create 65 percent of all net new jobs and employ roughly half of all workers in the private sector. According to the …

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