The FinReg Pod

On Thursday, June 25th, the Federal Reserve released the results of its annual bank stress testing exercise. Due to the ongoing pandemic and the economic recession it has caused, there was added attention on this year’s results. In this episode, Greg Gelzinis explains what the stress tests do and do not reveal, and what risks remain to the banking sector. Gregg is a senior policy analyst for Economic Policy at the Center American Progress, where he focuses on financial institutions, financial markets, and consumer finance policy. Resources: Bank Capital and the Coronavirus Crisis 4 Ways the Federal Reserve Can Improve the Resilience of the Banking System https://cdn.americanprogress.org/content/uploads/2020/05/07111724/Banking-Capital.pdf Are we seeing the demise of stress testing From Federal Reserve Board releases results of stress tests for 2020 and additional sensitivity analyses conducted in light of the coronavirus event https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625c.htm Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog.

The coronavirus pandemic has upended American capitalism and forced the federal government to spend unprecedented sums of money to support struggling consumers and businesses. Thus far, Congress has enacted four separate pieces of legislation, costing approximately $2.4 trillion, with many arguing that more is needed to prevent Great Depression levels of unemployment and reduced economic activity. In this episode, Vanguard's global chief economist, Joe Davis, talks about the efficacy of the fiscal policy response to date and what more can, and should, be done. Joe also discussed the Federal Reserve’s actions and his view on negative interest rates. You can find Joe’s recent blog post on the employment retention tax credit here: https://vanguardinstitutionalblog.com/2020/06/02/a-third-line-of-defense-for-the-u-s-economy/ Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog. You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

The country’s response to COVID-19 has constrained economic activity, dramatically reducing or eliminating the income of millions of workers.  With enactment of the CARES Act, homeowners with Federally-backed mortgage loans (backed or owned by HUD, FHA, VA, USDA, Freddie Mac, or Fannie Mae) are entitled to up to six months of payment forbearance, which may be extended up to a year, upon a simple attestation of financial hardship.  In this episode, Ed DeMarco, president of the Housing Policy Council, talks about the current stresses our nation’s housing finance system is facing and the impact the CARES Act forbearance plan is having on mortgage servicers, particularly nonbank servicers. From 2009 to 2014, DeMarco was acting director of the Federal Housing Finance Agency (FHFA), where he served as the conservator for Fannie Mae and Freddie Mac and regulator of those companies and the Federal Home Loan Banks. In this episode DeMarco also talks about the future of Fannie and Freddie and the challenges associated with being both the conservator and regulator of these entities. You can find DeMarco's paper here: https://fbb0ab68-1668-4db6-9365-051035190b71.filesusr.com/ugd/d315af_a9255256f817428a9554020300ed0299.pdf Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog. You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

A key feature of the recently passed $2 trillion stimulus package, also known as the CARES act, is the Paycheck Protection Program, which is a Small Business Administration (SBA) fully guaranteed loan program designed to provide a direct incentive for small businesses to keep their workers on the payroll. The program launched April 3rd and has received a lot of attention due to its perceived sloppy rollout and the incredible demand for these loans from America’s struggling small businesses. In this episode, Greg Seward, General Counsel of Wilmington, North Carolina based LiveOak Bank, talks about how the Paycheck Protection Program is working in practice and some of the challenges banks like his are having in meeting the demand for these loans. LiveOak is the largest SBA lender in the country and Greg has been consulting with the SBA and other lenders as they struggle to help support America’s small businesses during the pandemic. Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog. You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

The coronavirus pandemic has upended American capitalism and forced the Federal Reserve to take drastic steps to keep money flowing throughout the financial system. The Fed has dusted off its 2007-09 financial crisis playbook and expanded it with unprecedented lending facilities that target corporate America directly. What is the purpose of these programs, how do they work, and what tools remain in the Fed’s toolbox to help aid the economy during these unprecedented times? A conversation featuring former Deputy Treasury Secretary and Federal Reserve Board Governor, Sarah Bloom Raskin; Global Financial Markets Center faculty director, Lawrence Baxter, and Global Financial Markets Center executive director, Lee Reiners. Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog. You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

Ty Gellasch is executive director of Healthy Markets Association, an investor-focused non-profit coalition that was founded on the premise that investors need independent information and analysis of market structure. In this episode, Ty discusses the rise of numerous for-profit securities exchanges, the role of high-frequency trading, and the ability of regulators to understand what’s going on in securities markets at any given moment.  Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog. You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

Sarah Quinn, an Associate Professor of Sociology at the University of Washington, and author of: "American Bonds: How Credit Markets Shaped a Nation," talks about the long history of the US government’s use of credit allocation as a tool of statecraft. Giving us insight into her book, Quinn shows that since the Westward expansion, the U.S. government has used financial markets to manage America’s complex social divides, and politicians and officials across the political spectrum have turned to land sales, homeownership, and credit to provide economic opportunity without the appearance of market intervention or direct wealth redistribution.  Check out the links below for more info on Sarah Quinn and a link to her book!  https://soc.washington.edu/people/sarah-quinn https://www.amazon.com/American-Bonds-International-Comparative-Perspectives/dp/0691156751 Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog. You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

Ryan Clements, assistant professor at the University of Calgary Law School, discusses his doctoral research on how Exchange Traded Funds may contribute to financial market instability. Ryan acknowledges the fact that ETFs have made the average investor immeasurably better off by providing low-cost diversification, but his research has shed light on what is a classic tragedy of the commons problem, whereby what is rational for individual investors could weaken the market as a whole. Clements also talks about how the growth in ETFs has led to investor herding behavior, and how this may be contributing to market inefficiencies. Check out the following articles for more information: New Funds, Familiar Fears: Do Exchange Traded Funds Make Markets Less Stable? Part I, Liquidity Illusions by Ryan Clements https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3343976 New Funds, Familiar Fears: Are Exchange Traded Funds Making Markets Less Stable? Part II – Interaction Risks by Ryan Clements https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3486027 The Hidden Dangers of the Great Index Fund Takeover by David McLaughlin and Annie Massa https://www.bloomberg.com/news/features/2020-01-09/the-hidden-dangers-of-the-great-index-fund-takeover Want to contact the show? Reach out at reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog. You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

Bill Coen, former Secretary General of the Basel Committee on Banking Supervision, discusses his experience on the Basel Committee as he led the effort to develop and define the Committee's strategy with the ultimate objective of reaching consensus on global guidelines, standards, and best practices. As Secretary General and career at the Basel Committee, Bill played an instrumental role in reshaping the regulation of the global financial system, particularly after the global financial crisis. Bill also highlights some of the critiques on the Basel Committee. Want to contact the show? Email reiners@law.duke.edu Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog: https://sites.duke.edu/thefinregblog/ You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

Rostin Behnam, Commodity Futures Trading Commission (CFTC) Commissioner, and Sarah Bloom Raskin, former Deputy Treasury Secretary and Federal Reserve Board Governor, speak about the risks that climate change poses to the stability of our financial system. In the US, central bankers and financial regulators have been slow to adopt an understanding of the detrimental impacts of climate change, but Commissioner Behnam is attempting to change that. This episode is a fascinating conversation about a topic that is unfortunately only growing in prominence as we continue to see more and more severe weather events.   Want to contact the show? Email reiners@law.duke.edu   Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog: https://sites.duke.edu/thefinregblog/   You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/