Stephen Cecchetti, Kim Schoenholtz, 14 July 2017

The US Treasury recently published the first in a series of reports designed to implement the seven core principles for regulating the US financial system announced in an Executive Order from President Trump. While Trump's stated principles provide an attractive basis for making the financial system both more cost-effective and safer, this column argues that, at least when considering the largest banks, adopting the Treasury’s recommendations would make the financial system less safe. And, it would do so with little prospect for boosting economic growth.

Stephen Cecchetti, Kim Schoenholtz, 29 May 2017

In April 2017, the US House of Representatives passed a bipartisan revision of the bankruptcy code, which would expedite the resolution of adequately structured intermediaries. This column considers the new Financial Institutions Bankruptcy Act of 2017 and how it fits in with the existing Dodd-Frank mechanism. By raising the odds of an effective resolution, the Act (as a complement to Dodd-Frank) boosts the credibility of the US regime. However, in the absence of an Orderly Liquidation Fund-like provision for temporary government funding, investors and foreign regulators will expect a future US government to re-introduce an ad hoc bailout mechanism when it is inevitably needed.

Evangelos Benos, Richard Payne, Michalis Vasios, 25 February 2016

Since the Global Crisis, a key ingredient of reforms has been to force over-the-counter contracts to be traded in more transparent exchange-like settings. The aim has been to reduce the cost of trading such instruments and make markets more resilient. This column analyses the impact of the Dodd-Frank Act in the US on the market for vanilla interest rate swaps. The introduction of swap execution facilities trading is associated with a significant improvement in swap market liquidity. This suggests that Europe may see similar benefits from centralising swap trading, though it remains to be seen how these markets will operate in more volatile times.

Takeo Hoshi, 23 December 2012

Rejigging financial regulation is in vogue. But, in the world of international finance, how well do different regulatory systems join up? This column argues that the US Dodd Frank Act and Basel III are, in part, incompatible and that harmonising them may lead to unintended consequences. The US ought to tread carefully here but should also try hard to maintain the spirit of better financial regulation.

Priya Nandita Pooran, 14 November 2010

Will the US Dodd-Frank Act work? This column argues that unless institutional oversight shifts from the current fragmented structure to a federal one, the Dodd-Frank reforms could be prevented from having any significant positive effect on the surveillance of the financial system.

Viral Acharya, Thomas Cooley, Matthew Richardson , Richard Sylla, Ingo Walter, 24 November 2010

Of the recent reforms to make financial systems more robust, the US Dodd-Frank Wall Street Reform and Consumer Protection Act stands out. Despite being broadly in favour of its proposals, this column identifies flaws in its design that fail to deal with the main causes of the crisis and that will lead to further implicit government guarantees.

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