Financial Services & Corporate Governance

How Risky Are the Banks Now? What Regulatory Reforms Make Sense?

Six months ago the banking sector experienced severe turmoil, including bank failures. Now the situation seems calmer, despite continuing risks. Experts discuss reform ideas like the proposed “Basel Endgame” capital regulations and provide recommendations on dealing with issues like asset losses and recession risks in the current environment.

Examining the SEC’s Approach Towards Crypto

Join us for an in-depth exploration into the SEC’s recent lawsuit against Coinbase – a case that will no doubt…

Deep Dive Episode 270 – The 2023 Bank Runs and Failures: What Do They Mean Going Forward?

This year’s sudden collapse of First Republic, Silicon Valley, and Signature banks were the second, third, and fourth largest bank…

Deep Dive Episode 265 – A Discussion on Central Bank Digital Currencies and the Future of Financial Privacy

Experts explore central bank digital currencies (CBDCs) and the ongoing debates over financial privacy, especially in relation to use of cryptocurrencies and other software privacy tools.

Deep Dive Episode 252 – Cryptocurrency Regulation in the Aftermath of FTX

The collapse of FTX has intensified the debate about how cryptocurrencies should be regulated, including proposed federal legislation.

Explainer Episode 40 – FTC’s New Strategic Plan and the Future of Agency Action

In this episode, experts discuss the goals of the FTC’s new Strategic Plan as well as the challenges facing future agency action.

Deep Dive Episode 227 – Crypto Wars: Balancing Privacy versus National Security

An expert panel debates how digital asset policies can protect freedom and privacy while maintaining safety from bad actors.

Deep Dive Episode 224 – Regulating the New Crypto Ecosystem: Necessary Regulation or Crippling Future Innovation?

At an RTP event, an expert panel addressed current and future efforts at regulation of cryptocurrency.

Deep Dive Episode 223 – Regulating the New Crypto Ecosystem: SEC Commissioner Hon. Hester M. Peirce

At an RTP event, SEC Commissioner Hester M. Peirce addressed current and future efforts at regulation of cryptocurrency.

Deep Dive Episode 220 – The Government’s Arms Around Cryptocurrency: Hug or Stranglehold?

A panel of experts examined the current state and future of the regulation of cryptocurrency.

Deep Dive Episode 218 – A Discussion on Stablecoins

An expert panel explored the rise of stablecoins and debated how regulators ought to approach them.

Deep Dive Episode 210 – Cryptocurrencies: Money, Trust and Regulation

Jerry Brito and Dr. Oonagh McDonald discussed the nature of money and how regulators have approached the burgeoning cryptocurrency industry.

Deep Dive Episode 200 – Corporate Social Responsibility, Investment Strategy, and Liability Risks

A distinguished panel joins us to discuss a new paper that examines the legal implications of the rise of “ESG” investing.

Deep Dive Episode 185 – SEC v. Ripple Labs: Cryptocurrency and “Regulation by Enforcement”

An expert panel discusses SEC v. Ripple Labs, the broader cryptocurrency regulatory landscape, and potential legislative and regulatory reforms.

Deep Dive Episode 170 – Engine of Inequality: The Fed and the Future of Wealth in America

Wayne Abernathy and Karen Shaw Petrou discuss Petrou’s new book, the problems she identifies in Fed policies, and how she sees her proposals rising above partisanship to achieve the goals she sets out.

Deep Dive Episode 166 – The CFPB Taskforce Report on Federal Consumer Financial Law

CFPB Taskforce on Federal Consumer Financial Law Chair Todd Zywicki joins us to discuss his taskforce’s report.

Deep Dive Episode 159 – Countering the Politicization of Financial Services: Is the Cure Worse than the Disease?

This live podcast explores the issues surrounding the politicization of financial services, including the OCC rulemaking and other recent initiatives.

Deep Dive Episode 158 – Courthouse Steps Oral Arguments: AMG Capital Management v. FTC

A distinguished panel analyzes oral arguments in AMG Capital Management v. FTC, a case that could define the scope of the FTC’s remedial authority.

Deep Dive Episode 127 – Should the Fed Create Fedcoin, Digital Dollars, and Fed Accounts?

Some say the U.S. Federal Reserve should issue a  “Fedcoin” or “digital dollar.” This live podcast discusses the pros and cons of such a move.

Deep Dive Episode 122 – New Labor Department Rule: Taking on ESG Investment Risk to American Retirement Security

In this live podcast, J.W. Verret discusses the Labor Department’s proposed rules regarding ESG investing and their implications for retirement security.

Deep Dive Episode 110 – Community Reinvestment Act: Remedy or Relic?

Mehrsa Baradaran and Diego Zuluaga discuss proposed reforms by the Office of the Comptroller of the Currency and the FDIC and how those changes will affect the banking system and low- and moderate-income communities.

Deep Dive Episode 84 – What’s Next for Fannie, Freddie, and Housing Finance Reform?

The Federal Housing Finance Agency (FHFA) oversees the administration of both Freddie Mac and Fannie Mae. What’s next for the agency? What are the priorities that the agency should be pursuing? This episode features remarks from FHFA Director Mark Calabria and a discussion of the issues with reform by our panelists.

Explainer Episode 8 – The Community Reinvestment Act

Passed in 1977, the Community Reinvestment Act (CRA) was intended to encourage banks and other financial institutions to lend to lower-income individuals in their communities. Has the CRA succeeded in this goal or is there room for improvement? Aaron Klein and Diego Zuluaga weigh in on this important question.

Deep Dive Episode 69 – SOX Auditor Attestation Requirements

Do proposed rule changes from the SEC properly balance the concerns of investor protection and capital formation for smaller businesses? John Berlau, Wes Bricker, and J.W. Verrett discuss, and C. Wallace DeWitt moderates.

Deep Dive Episode 64 – The Federal Reserve and Real-Time Payment Systems

The Federal Reserve is currently exploring ways to support faster payments in the U.S., a move which would facilitate real-time interbank settlement of faster payments. Experts discuss the implications and challenges of this change.

Deep Dive Episode 58 – LIBOR – Will a $200 Trillion Global Benchmark Disappear – or Not?

LIBOR is a hugely important interest rate benchmark, used globally and embedded in over $200 trillion of financial contracts. Experts discuss the challenges and future of this index.

Deep Dive Episode 56 – Loan Shark Prevention Act

This podcast examines the economics of interest-rate ceilings on consumer credit and the historical experience with such proposals, and discusses a proposal to create a Post Office bank.

Deep Dive Episode 49 – How Should the IRS Handle Cryptocurrencies?

James Foust discusses the ambiguity that exists around the treatment of cryptocurrency at the IRS and explores actions that Congress and the IRS could take to fill the gaps.

Deep Dive Episode 38 – The Debate Over the SEC’s Accredited Investor Standard

In the 38th Deep Dive episode of Fourth Branch, Urska Velikonja (Georgetown University Law Center) and J.W. Verret (Antonin Scalia Law School) consider and debate potential reforms to the SEC’s accredited investor standard rule.

Deep Dive Episode 37 – Fintech Licensing and the OCC Charter

Brian Knight (Mercatus Center) and Margaret Liu (Conference of State Bank Supervisors) discuss the Office of the Comptroller of the Currency’s move to offer some non-depository fintech firms the opportunity to obtain a federal bank charter, and the possible challenges and tensions the move may pose for federalism.

Deep Dive Episode 36 – What Should the FHFA’s 2019 Agenda Be?

Ed DeMarco (Housing Policy Council) and Alex J. Pollock (R Street Institute) discuss the key issues and projects for the Federal Housing Finance Agency going forward and what it can do to lead reform of Fannie and Freddie — and reform of American housing finance in general.

Deep Dive Episode 22 – Fintech and Federal Alternatives to State Money Transmission Licensing

Peter Van Valkenburgh (Coin Center) discuss the potential need for a federal regulatory structure to harmonize and facilitate the innovative landscape surrounding digital money transmitters.

Deep Dive Episode 13 – Discussion on U.S. Treasury Reports

J. W. Verret (Antonin Scalia Law School) and Wayne Abernathy (American Bankers Association) discuss the Treasury Department’s recent report to President Trump on Core Principles for Financial Supervision.

Financial Privacy And The Fourth Amendment: Restoring Balance To The Crypto Universe

Norbert Michel

On Tuesday June 7, I had the privilege of participating in Crypto Wars: Balancing Privacy versus National Security, a Federalist Society panel moderated by Dina Rochkind. The other panelists–Michele Korver, Kathy Kraninger, and Mick Mulvaney–and I discussed a wide range of issues related to the current regulatory environment for digital assets, a bit broader than the title might suggest.

How Fifth Circuit Affirmed George Washington’s Vision of Fundamental Justice

John Berlau

The recent ruling by the U.S. Court of Appeals for the Fifth Circuit in Jarkesy v. SEC is a victory for limited constitutional government on many levels. As Mario Loyola, professor at Florida International University and senior fellow at my organization, the Competitive Enterprise Institute (CEI), writes in The Wall Street Journal, the court “has taken what could be a historic step toward restoring the Constitution’s checks and balances.”

Don’t Fear Volatility in Cryptocurrency Prices; Fear Regulations that Will Harm America’s Crypto Lead

John Berlau

John Berlau discusses the future of cryptocurrencies and how regulators might approach the nascent industry.

Stressing Banks and the Economy

Wayne A. Abernathy

This blog post discusses to what extent the Federal Reserve’s models test for the real world problems of the Fed’s monetary policy.

Collins v. Mnuchin and GSE Privatization

J.W. Verret

J.W. Verret argues that Treasury Secretary Mnuchin should act now to support efforts to privatize Fannie Mae and Freddie Mac.

Replacing Too Big to Fail with Safe to Fail

Wayne A. Abernathy

Rejection of the idea that any bank is too big to fail (TBTF) is currently universal among U.S. policymakers. Yet some apprehension persists that this policy consensus may be fragile. That apprehension may continue until worries of too big to fail are replaced with confidence that U.S. banks are safe to fail.

Relax, a Capital Idea

Wayne A. Abernathy

The Federal Reserve Board began the second quarter of the year by relaxing part of its capital rules for bank holding companies. In particular, its interim final rule would exclude from some capital calculations the investments that banks have in funds placed with the Fed and holdings of U.S. Treasury securities.

Quarles’ Conundrum of Bank Supervision

Wayne A. Abernathy

Without subpoenas, bank examiners routinely poke through the books, records, premises, and operations of chartered banking firms.  In fact, examiners are resident—as in, have permanent offices—in the headquarters of the larger banks.  They essentially live there.  Intrusive examination is the core of bank supervision.

When Banks Act as Regulators within a Regime of Privilege

Brian Knight

Banks receive benefits because they are believed to be essential for a functioning economy, but it is also likely that these benefits supplement the market power banks enjoy. Does that make banks trying to de facto regulate other industries by withholding services, in effect trying to impede lawful commerce, problematic?

Feds: Gambling Fine, But Investing Too Risky

John Berlau

“In the risk reform debate, as in so many political debates, logic is often for losers.” So lamented Competitive Enterprise Institute founder and president emeritus Fred L. Smith, Jr. in 1995, and he has expressed similar sentiments many times since.

The FDIC Refinery

Wayne A. Abernathy

The FDIC took several actions to refine proposed and existing banking regulations, each with a focus on better achieving their purpose by making them easier to administer and less of a weight on economic activity.

Key Points in the Treasury’s Fannie/Freddie Paper

Alex J. Pollock

The important parts of the Treasury’s new paper on Fannie and Freddie reform are not the legislative recommendations, since legislation is not going to happen. They are the administrative steps which can actually be taken now, with political will.

We Three Kings: Lacking Representation in Index Fund Corporate Governance

Brian Knight

In his new article, Prof. Caleb N. Griffin discusses the challenge of how to make index funds reflect the preferences of actual investors when it comes to corporate governance issues.

Of Class Actions and Usury – Shrinking Credit in the Second Circuit

Jerry Loeser

If successful, two class actions could discourage investors from purchasing securitized debt owed by borrowers residing in the Second Circuit, thus reducing markets for the securitization of loans by banks to borrowers residing in the Circuit.

Fed ‘Independence’ is a Slippery Slope

Alex J. Pollock

In the light of the political reality of Federal Reserve history, a completely independent Fed looks impossible. In the light of the unknowable future, it looks undesirable.

Herring Does Capital

Wayne A. Abernathy

Richard J. Herring, professor at the Wharton School, is well known for his insightful commentary on the financial system. His paper on “The Evolving Complexity of Capital Regulation” is a good example of why. Professor Herring presents a readily accessible and remarkably concise history of the development of global standards for bank capital, starting with the first Basel Capital Accord (Basel I—regulators are now looking at the implementation of Basel IV). Then he walks through additions and amplifications under the Dodd-Frank Act and various regulatory innovations, each regulatory round designed to address perceived problems of previous standards.

May I Offer You Some Guidance?

Wayne A. Abernathy

Guidance from regulators to the regulated can be valuable when kept within the bounds of genuine guidance. When it moves toward compulsion, it moves onto ground obnoxious to the rule of law. The joint statement of five financial regulators reinforces that understanding.

When Is a Bureaucracy So Independent That It’s Unconstitutional?

Alex J. Pollock

In a conceptually important opinion, the Fifth Circuit Court of Appeals has just ruled that the governance structure of the Federal Housing Finance Agency (FHFA) is unconstitutional.

The Dangers of Independence for Executive Branch Agencies

Peter Wallison

There may be cases where executive branch officials need to be independent of the president, but they are likely to be exceedingly few. The Supreme Court, if it takes an appeal from the 5th Circuit’s decision, should approach the issue from this perspective.

Anyone Know a Good Tailor?

Wayne A. Abernathy

It is difficult to find a public statement by a financial services policymaker these days where the policymaker does not invoke the importance of tailoring bank regulation and supervision.  This is major progress from the days of one-size-fits-all programs.  A fundamental characteristics of the U.S. banking system is its diversity of business models, developed over the years to match the diversity of financial services customers.  Can bank supervision be tailored to accommodate that diversity?

The Ongoing Battle Over the CFPB’s Constitutionality

Julius Loeser

Under former CFPB Director Cordray, the CFPB defended its constitutionality, but, now, under Acting Director Mulvaney, the CFPB is arguing that the issue is now moot because Acting Director Mulvaney has ratified the enforcement actions against All American and the President has the right to remove the Acting Director at will.

The Consumer Bureau Asks Congress to Fix It

Wayne A. Abernathy

Mulvaney’s basic argument is cogent and refreshing.  In short, he says “the Bureau is far too powerful, and with precious little oversight of its activities.”

Finding the Value in Financial Failure

Wayne A. Abernathy

Title II of Dodd-Frank—written in law as secondary, a recourse to the bankruptcy process—has been criticized by some for being punitive, prone to destroy value, and by others as too vulnerable to use in propping up failed firms that should be removed from the financial playing field.

DC Circuit Decision on CFPB Leadership

Julius “Jerry” Loeser

Today, the U.S. Court of Appeals for the District of Columbia, sitting en banc, issued its decision in PHH Corporation, et al. v. Consumer Financial Protection Bureau, on whether the provision in the Dodd-Frank Act  that the director of the CFPB cannot be removed by the President for any reason other than “inefficiency, neglect of duty, or malfeasance” is consistent with Article II of the Constitution vesting executive power in the President who is to “take care that the Laws be faithfully executed.”

The Bureau Shrinks the Supply of Smaller Dollar Loans. What About the Demand?

Wayne A. Abernathy

These days the financial regulators are engaging in a careful but high priority regulatory reform process, looking at regulations of recent years to see how they may be revised and refined to promote economic growth. Except for the Bureau of Consumer Financial Protection. The Bureau is still in the business of adding new regulations.

What Can a Sandbox in Arizona Do for Financial Innovation?

Wayne A. Abernathy

History demonstrates that innovation is one of the things that a free society does best. Fostering innovation was one of the goals of the Founders who created a federal system of government, since centralization of power tends to discourage new thinking, creativity, and new ways of doing things. This is particularly true for new ways of doing things that can challenge “old ways.” Some “old ways,” such as freedom and individual rights, are timeless. Others are more temporal and in need of adjustment to remain relevant to evolving societies and conditions.