How can policymakers fix the financial system to reduce the risk of another economic crisis and yet more bailouts? Congress is considering comprehensive new regulations along with a mandatory “resolution” regime for systematically important financial institutions which near insolvency, and access to federal funding to cover the cost. But these steps would make the financial system worse, not better. And while claiming to make financial bailouts a thing of the past, it would actually make them more likely, in effect creating a permanent TARP program. More government regulation and pre-funded bailouts will not fix the system. Instead, the focus should be on establishing an effective bankruptcy system for large financial firms to allow failures to be addressed in the same way failure is addressed in other industries, while improving capital standards.
The burden of regulation on Americans increased at an alarming rate in fiscal year 2010. Based on data from the Government Accountability Office, an unprecedented 43 major new regulations were imposed by Washington. Read More.
Our latest video explains, in its current form, the Financial Regulation bill can better be described as a Wall Street Bailout bill. Read More.
Do consumers need a new regulatory agency to protect them in the financial marketplace? The question has been at the center of the ongoing congressional debate over financial services reform. Read More.
The Obama Administration's proposal for financial regulatory reform would give government regulators almost unlimited powers to take over financial institutions. The better choice would be to amend U.S. bankruptcy law. Read More.
Here are all the blog posts from The Heritage Foundation on financial markets. Read More.
By now, it should be clear even to casual observers that the Volcker Rule, which was intended to limit the “risky” activities of banks by banning them from certain types of transactions, will be nearly impossible to implement without severe unintended damage to the U.S. financial system and many other…
Abstract: During the first three years of the Obama Administration, 106 new major federal regulations added more than $46 billion per year in new costs for Americans. This is almost four times the number—and more than five times…
FYI: Heritage WebMemos are now called Issue Briefs. One of the troublesome aspects of President Obama’s State of the Union speech was that the much-hyped housing section was little more than a slightly revised…
Within hours of Richard Cordray assuming the role of director[1] at the Consumer Financial Protection Bureau (CFPB), agency officials began exercising their newly expanded powers. Their immediate target is all manner of “nonbank”[2] financial services used by millions of households. While proponents contend that the new…
The Congressional Budget Office (CBO) warns that a tax on certain financial transactions could “diminish the importance of the United States as a major financial market” and that, in the short run, “imposing the transaction tax would probably reduce output and employment.”[1] While these effects would be “mitigated”…
Congress passed a combined spending proposal (H.R. 2112) that includes an increase in the limits on mortgages held by the Federal Housing Administration (FHA), though Fannie Mae and Freddie Mac are left untouched. A forthcoming study by The Heritage Foundation demonstrates how federal intervention in the…
In one spectacularly misguided move, a House–Senate conference committee has taken a step that will expand the federal presence in the housing markets, preserve Fannie Mae and Freddie Mac, and damage the near-bankrupt Federal Housing Administration (FHA) in the name of helping the housing sector to recover. One small provision…
My name is Ronald. D. Utt. I am the Herbert and Joyce Morgan Senior Research Fellow at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation. Until recently, federal…
Abstract: Congress enacted the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010 in the wake of a financial crisis followed by a serious economic recession. Regrettably, many of the provisions of the Dodd–Frank Act contravene basic American principles and inhibit rather than…
From The Heritage Foundation, I'm Ernest Istook. …
Demanding Diversity Through Uniformity“Derivatives” have gone from being the hottest thing on Wall Street to being the hottest thing in Washington. Indeed, President Obama -- who mentioned them no fewer than three times during Thursday’s Cooper Union speech -- has vowed to veto any financial reform bill that doesn’t attempt…
Revised and updated July 06, 2011. Washington’s reckless spending spree of the past several years and unwillingness to confront the mountains of debt coming soon from unreformed federal entitlement programs threaten the economic and social…
Abstract: Do consumers need a new regulatory agency to protect them in the financial marketplace? The question has been at the center of the ongoing congressional debate over financial services reform. But…
In an important victory for free enterprise, a unanimous panel of the U.S. Court of Appeals for the D.C. Circuit has struck down the regulatory hijacking of corporate board elections. Authorized by the Dodd–Frank statute, the so-called proxy access rule crafted by the Securities and Exchange Commission (SEC) was deemed…
Persuaded that lax regulation of financial derivatives contributed to the 2008 financial crisis, policymakers in Congress and the Obama Administration have adopted a knee-jerk solution: regulate everything. The Obama Administration has proposed and the House Financial Services and Senate Banking Committees have each approved schemes for…
President Obama has reached into the past to try to resurrect failed bank regulatory approaches as a way of raising the stakes on his newly emphasized financial regulatory plan. Referred to as the “Volcker rule” after former Fed Chairman Paul Volcker, who developed the two-part proposal, it would further…
Americans need jobs. The private sector of the American economy will create jobs when government removes the obstacles it has placed in the way of job creation and when the demand for goods and services rises. The government should promptly review the vast increase in government regulation of the economy…
In response to the credit downgrade by Standard & Poor’s in August, the grim reports on the state of the economy, and the collapse of the stock and financial markets in the week after the downgrade, President Barack Obama has re-engaged with the issue of America’s faltering economy and the…
In its ceaseless quest to protect us from ourselves, Congress in 2009 compelled credit card companies to confirm an...…
House leaders have reportedly struck a deal to vote on reauthorization of the Export-Import Bank next week despite...…
This is the third of our four-part series on Occupy Wall Street, transcribed from a recent Heritage Foundation event...…
After more than a year of delay, the House Financial Services Committee is finally starting work on legislation that...…
Given the task of producing a plan to develop a new housing finance system after the crisis of 2008 and the failure of...…
The release of the final report(s) of the Financial Crisis Inquiry Commission (FCIC) brings to mind the story of...…
When the Dodd-Frank financial-overhaul bill was passed last summer, it was done so with much of the fanfare and...…
The Wall Street Journal reports today: Banks are considering additional fees on credit cards and checking accounts. But...…
As President Obama today signed into law the Dodd-Frank financial regulation bill, two words were left unspoken: Fannie...…
The President is scheduled to sign the financial overhaul bill today, yet he might want to pause a moment to consider...…
Norman B. Ture Senior Fellow in the Economics of Fiscal Policy
Senior Research Fellow in Retirement Security and Financial Institutions