Found 18 article(s) for author 'Hal Scott'

The Trump administration—not the Fed—has it right on bank regulation

The Trump administration—not the Fed—has it right on bank regulation. Hal Scott, July 3, 2017, Opinion, “All 34 of the largest banks in the United States, representing over 75 percent of U.S. banking assets, recently passed the Federal Reserve Board’s annual stress tests for the first time since the tests were created in 2011. However, celebration is very premature.Link

Tags: , , ,

Harvard’s Scott Says U.S. Has Latitude on Bank Reforms

Harvard’s Scott Says U.S. Has Latitude on Bank Reforms. Hal Scott, March 23, 2017, Video, “Hal Scott, Harvard Law School professor and president of Committee on Capital Markets Regulation, discusses the Trump administration’s approach to financial regulation and how it relates to the Federal Reserve and monetary policy. Scott is a potential candidate to be the next Vice Chair of the Federal Reserve. He speaks on “Bloomberg Surveillance.”Link

Tags: , , , ,

The Fed’s Stress Tests Need to Be Transparent

The Fed’s Stress Tests Need to Be Transparent. Hal Scott, September 16, 2016, Opinion, “The stress tests that big American banks face each year are about to get more stressful. The Fed is planning to substantially increase—by an average of 57%, we calculate—the regulatory capital that the eight largest banks in the U.S. need to pass the annual tests.  Had these expected higher capital levels been in effect this year, it is likely that the country’s four largest banks ( J.P. Morgan Chase, Bank of America, Wells Fargo and Citigroup) all would have failed the test. As a consequence, they would have been barred from remitting more profits to their shareholders.Link

Tags: , , ,

Bank Stress Tests Won’t Save Us From Financial Crisis

Bank Stress Tests Won’t Save Us From Financial Crisis. Hal Scott, June 23, 2016, Video. “It’s a big week for Wall Street. Minutes before polls close in the U.K. on the Brexit vote Thursday, the Fed is set to release its first round of stress-test results, followed by a second round of results next Wednesday. The tests are used to determine whether or not the largest banks could weather a major crisis, such as Britain leaving the EU, and whether they can boost their dividend payout to shareholders.Link

Tags: , , , , ,

Publish the Secret Rules for Banks’ Living Wills

Publish the Secret Rules for Banks’ Living Wills. Hal Scott, June 10, 2016, Opinion. “The Federal Reserve and the Federal Deposit Insurance Corp. recently determined that five of America’s largest banks do not have credible plans to go through bankruptcy without relying on extraordinary government support. If these five firms— J.P. Morgan Chase, Bank of America, Wells Fargo, Bank of New York Mellon and State Street—can’t develop “living wills” that satisfy regulators, then the Dodd-Frank Act authorizes the government to break them up as soon as 2018.Link

Tags: , , , ,

Connectedness and Contagion: Protecting the Financial System from Panics

Connectedness and Contagion: Protecting the Financial System from Panics. Hal Scott, May 2016, Book. “The Dodd–Frank Act of 2010 was intended to reform financial policies in order to prevent another massive crisis such as the financial meltdown of 2008. Dodd–Frank is largely premised on the diagnosis that connectedness was the major problem in that crisis—that is, that financial institutions were overexposed to one another, resulting in a possible chain reaction of failures. In this book, Hal Scott argues that it is not connectedness but contagion that is the most significant element of systemic risk facing the financial system. Contagion is an indiscriminate run by short-term creditors of financial institutions that can render otherwise solvent institutions insolvent. It poses a serious risk because, as Scott explains, our financial system still depends on approximately $7.4 to $8.2 trillion of runnable and uninsured short-term liabilities, 60 percent of which are held by nonbanks.Link

Tags: , , , , ,

The Federal Reserve: The Weakest Lender of Last Resort Among Its Peers

The Federal Reserve: The Weakest Lender of Last Resort Among Its Peers. Hal Scott, November 25, 2015, Paper. “This article for the first time compares the Federal Reserve’s powers as lender of last resort (‘LLR’) and its ability to fight contagion, with its three major peers, the Bank of England (the ‘BOE’), the European Central Bank (the ‘ECB’) and the Bank of Japan (the ‘BOJ’). It concludes that the Federal Reserve (the ‘Fed’) is currently the weakest of the four, largely due to a hostile political environment for LLR powers, which are equated with bailouts, and restrictions placed by the 2010 Dodd–Frank Act on the Fed’s ability to loan to non-banks, whose role in the financial system is ever-increasing. This is a concern for the global as well as the US financial system, given the economic importance of the United States and the use of the dollar as a reserve currency …Link

Tags: , , ,

The Next Stock Market Shutdown Could Be Much Worse

The Next Stock Market Shutdown Could Be Much Worse. Hal Scott, August 16, 2015, Opinion. “The three-hour shutdown of the New York Stock Exchange last month made headlines world-wide. Despite the brief calamity, investors emerged largely unharmed, because the technical glitch was with the NYSE’s trading platform. The outcome would have been very different had the problem been with the exchange’s consolidated public market data feed—the live feed that lets traders and investors see public bid and ask prices, the price and time of the last trade, and other crucial information…Link

Tags: ,