NYU Stern and Centre for Economic Policy Research Publish E-Book of Conference Proceedings
July 11, 2011
"Dodd-Frank: One Year On"– Academics, Members of Regulatory Community and Private Sector Give Views on Progress in Implementing Financial Reform –
New York, NY – July 11, 2011 – New York University Stern School of Business, together with the Centre for Economic Policy Research (CEPR), have published an e-book of the proceedings of the June 27th conference, “The Dodd-Frank Act—One Year On,” hosted by NYU Stern and The Pew Financial Reform Project in Washington, D.C. The e-book is published by VoxEU; C-Span coverage of the conference is also available.
The day-long conference brought together academics, members of the regulatory community and the private sector to discuss the progress made in implementing financial reform as well as the work remaining. In 14 succinct chapters the e-book provides a digest of the presentations of such participants as Thomas M. Hoenig, President of the Federal Reserve Bank of Kansas City; Michael Barr, a key architect of the Dodd-Frank Act; Neil M. Barofsky, the first Special Inspector General of the Troubled Asset Relief Program; and Matthew Richardson, Professor of Finance at NYU Stern and Director of its Salomon Center for the Study of Financial Institutions.
Among the observations from the conference discussed in the e-book:
-- Should capital requirements be imposed at the level of the firm or at the level of markets and transactions. In light of the prevalence of the “shadow banking system,” market- or asset-class level capital requirements are preferable, but except in a few cases, are not the focus of Dodd-Frank and its implementation.
-- There was growing dissatisfaction with the Basel III risk-weights approach and an increasing preference that regulators implementing Dodd-Frank consider measures that assessed the systemic risk of financial firms using market data and also employ regulatory stress tests.
-- Differing viewpoints emerged about whether the Orderly Liquidation Authority (OLA), visualized by Dodd-Frank to deal with the too-big-to-fail problem, was conceptually right in wishing to liquidate systemically important financial firms rather than resolve them in an orderly manner. An active discussion ensued about the advantages of building rule-based recapitalization of institutions directly into their capital structure, besides upfront capital requirements tied to systemic risk.
-- The conference also touched on issues that were not covered in the Dodd-Frank Act and that remain un-addressed, such as the household indebtedness, the need to unwind the government-sponsored enterprises (Fannie Mae and Freddie Mac, in particular) in order to promote a privately organized but well-capitalized mortgage finance system, and the fiscal adjustment of the government balance-sheet.
The e-book was edited by NYU Stern Professors Viral V. Acharya, Thomas F. Cooley, Matthew P. Richardson, and Ingo Walter, who have also published two other volumes on the financial crisis, “Regulating Wall Street,” (Wiley 2010) and “Restoring Financial Stability” (Wiley 2009). More information is available on the NYU Stern website at regulatingwallstreet.com.