Perspectives on Dodd-Frank and finance

260 Pages·2014·4.12 MB·English

by  Schultz

Perspectives on Dodd–Frank and Finance

Perspectives on Dodd–Frank and Finance
edited by Paul H. Schultz
The MIT Press
Cambridge, Massachusetts
London, England
© 2014 Massachusetts Institute of Technology
All rights reserved. No part of this book may be reproduced in any form by any electronic
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Library of Congress Cataloging-in-Publication Data

Perspectives on Dodd–Frank and finance / edited by Paul H. Schultz.
pages cm
Conference proceedings.
Includes bibliographical references and index.
ISBN 978-0-262-02803-5 (hardcover : alk. paper)
1. Finance—Government policy—United States. 2. United States. Dodd–Frank Wall
Street Reform and Consumer Protection Act. I. Schultz, Paul H., 1956– editor of
compilation.
HG181.P395 2014
332.0973—dc23
2014007223
10 9 8 7 6 5 4 3 2 1
To Margie, Emma, and Kate

Contents
Acknowledgments ix
1 Introduction 1
Paul H. Schultz
2 Economic Principles, Government Policy, and the Market
Crisis 9
Chester Spatt
3 The Basics of Too Big to Fail 25
Lawrence J. White
4 Creating a Responsive, Accountable, Market-Driven Financial
System 43
Thomas M. Hoenig
5 Panel Discussion on Banking Reform 55
Anil K Kashyap, James Overdahl, Anjan Thakor, and John
Walsh
6 Panel Discussion on Stability, Resolution, and
Dodd–Frank 81
James R. Barth, John Dearie, David Skeel, and Arthur Wilmarth
7 The Origins and Intent of the Volcker Rule 105
Priyank Gandhi
8 Panel Discussion on the Volcker Rule 115
Charles W. Calomiris and Matthew Richardson
viii Contents
9 Panel Discussion on the Consumer Financial Protection
Bureau 137
Jeff Bloch, Shane Corwin, and Todd J. Zywicki
10 Panel Discussion on Derivatives and Dodd–Frank 159
Amy K. Edwards, Raymond P. H. Fishe, Robert McDonald,
Craig Pirrong, and Paul H. Schultz
11 Mortgage Reform under the Dodd–Frank Act 183
Mark A. Calabria
12 The Dodd–Frank Act and the Regulation of Risk Retention in
Mortgage-Backed Securities 201
Cem Demiroglu and Christopher M. James
13 The Controversial New Disclosure Requirements in
Dodd–Frank 217
Paul H. Schultz
14 Conclusions 225
Paul H. Schultz
About the Authors 233
Index 245
Acknowledgments
This book is based on a conference on “Dodd–Frank and the Future of
Finance” that was held in Washington, DC, on June 13–14, 2013. It was
organized and sponsored by the University of Notre Dame’s Center for
the Study of Financial Regulation, whose mission is to promote rigor-
ous economic analysis of current and proposed financial regulation. I
am grateful to Phil Corporon, Carol Elliot, Margaret Forster, and Roger
Huang for their ongoing support of the center and its mission.
This conference was supported by a generous grant from NERA
(National Economic Research Associates), and several people from
NERA contributed to the discussions as audience members during the
conference. Planning a conference is a lot of work, and this one could
not have taken place without the efforts of Karma Grundy, Julia Lee,
Rob Lee, and Marlene Wasikowski. I owe special debts to James Over-
dahl and Chester Spatt for their advice as well as their participation in
the conference.
Deborah Cantor-Adams and Rosemary Winfield did a wonderful job
of editing the book and making all of us sound more articulate in the
process. Finally, I am grateful for the suggestions and advice of Jane
Macdonald and Emily Taber, which improved the book in many ways.