CERF Blog

Here’s the first paragraph from a FED press release of July 20th: The Federal Reserve Board on Monday approved a final rule requiring the largest, most systemically important U.S. bank holding companies to further strengthen their capital positions. Under the rule, a firm that is identified as a global systemically important bank holding company, or… Read more

The folks at Chapman University have produced an important new paper.  We’ve said for a long time that reducing California’s Carbon Emissions is both expensive and futile, if the goal is to reduce global atmospheric carbon.  Here’s what the report has to say: This paper demonstrates that even the complete elimination of state GHG emissions will have no… Read more

Previously published March 22, 2011 California remains mired in something like a zombie state, not quite dead, but certainly not vigorous, moving but with no clear direction. Perhaps, jobs and migration data best show California listless nature. Jobs have been increasing in almost every sector, but that job growth has been anemic. We saw only… Read more

I was at a meeting this morning with with people from across the economy.  We had a farmer, an accountant, a banker, two city economic development people, a university dean, and more.  While the meeting had another purpose, we ended it by going around the room and having people tell us how things were going… Read more

Raghu Rajan has a piece on income equality and its impact on the recent financial crisis.  It’s the same theme he addressed in depth in his excellent recent book, Fault Lines.  As income inequality increases, politicians come under pressure.  They have three possible ways to address the problem: fix the underlying problem, wealth transfers, or… Read more

The debate over the repeal of California’s global-warming regulation, AB32, has degenerated into a shouting match, each side claiming economic ruin if the other side wins. A couple of long-dead French economists can help us think about the debate. The great French economist Leon Walras (1834-1910) showed that perfect markets result in an allocation of… Read more

When thinking about regulation, it is helpful to have some regulatory principles. Here are my proposals: Keep it simple. Simple regulation is cost-effective regulation. Simple regulation minimizes both regulatory costs to the government and compliance costs to the regulated firms, costs eventually borne by consumers or taxpayers. Complicated regulation invites lawsuits and encourages efforts to… Read more

Almost everybody pontificating about financial regulation seems to be recommending increased capital ratios, increasing the ratio of firm’s capital to assets. It is also true that financial regulation around the world includes minimum capital ratios. The reasoning seems to be that if you increase a financial institution’s capital, it is less likely to fail, but… Read more

I recently gave a talk and itemized my principals for bank regulation. They are: • Keep it simple • Preserve correct incentives • Minimize political influence • Maximize market feedback • Minimize moral hazard issues • Regulation is not protection Our friends at KERN Economics have come up with a plan that meets all of… Read more

I ran across this Robert Scheer piece in The Nation. Sheer laments the fact that the Obama administration seems determined to not bring back the Glass-Steagall Act, while McCain is trying to reinstate the regulation. Apparently, Larry Summers supported the repeal of the Glass-Steagall when he was with the Clinton administration. Scheer believes that Summers… Read more