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Daily Archives: November 17, 2014

The Orderly Liquidation Authority: Fanatical or Familiar? Idealistic or Unrealistic?

Massman, Stephanie, The Orderly Liquidation Authority: Fanatical or Familiar? Idealistic or Unrealistic? (May 2014). Available for download at SSRN: http://ssrn.com/abstract=2525825

“The systemic financial crisis of 2008 spurred the failure of numerous financial and non-financial entities. Regulators addressed each of these failures on an ad hoc ex-post basis, granting multiple bailouts in various forms. The refusal to extend these bailouts to one firm, Lehman Brothers, however, caused further panic and contagion throughout the already unstable market as one of the largest financial institutions of the U.S. underwent an extremely lengthy and value-destructive Chapter 11 bankruptcy. Criticism surrounding not only the bailouts, but also the decision to allow Lehman to fail under the Bankruptcy Code, led to the inclusion of the Orderly Liquidation Authority (OLA), a regulatory alternative to bankruptcy for systemically important financial institutions (SIFIs), in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The OLA, although perceived to be a radical departure from traditional bankruptcy, encompasses many familiar resolution principles. Most significant departures from the Bankruptcy Code can be explained by the necessity to ensure the maintenance of financial stability in the national and even global economy in the case of a SIFI failure. By banning future government bailouts as a means to handle a SIFI failure, the OLA also seeks to end the “Too Big To Fail” subsidy and achieve market discipline, such that moral hazard may be minimized. Although the prescribed tactics for effectuating a resolution under the OLA may in fact implicate new moral hazard concerns, many such issues in existence under the old resolution regime have indeed been eliminated. What remains to be seen is the extent to which the agencies will assume their proscribed authority to regulate these SIFIs and the extent to which the market will find their regulations credible.”

McKinsey Quarterly’s 50th anniversary edition

“In this unique anniversary edition of the Quarterly, leading management thinkers tackle the management challenges of tomorrow. Leaders including author Tom Peters, former IBM CEO Lou Gerstner, eBay head of HR Beth Axelrod, and The Second Machine Age authors Erik Brynjolfsson and Andrew McAfee explore topics such as leadership, the future of the organization, machine learning, long-term capitalism, and… Continue Reading

Knowledge Sharing in the Networked World of the Internet of Things

“Many experts say the rise of embedded and wearable computing will bring the next revolution in digital technology. They say the upsides are enhanced health, convenience, productivity, safety, and more useful information for people/organizations. At KMWorld Confererence, Lee Rainie shared the latest findings from Pew Research about the internet and puts it into organizational context… Continue Reading

CBO – Federal Policies and Innovation

“Innovation is a central driver of economic growth in the United States. Workers become more productive when they can make use of improved equipment and processes, and consumers benefit when new goods and services become available or when existing ones become better or cheaper—although the transition can be disruptive to established firms and workers as… Continue Reading

The Risks to the Inflation Outlook

The Risks to the Inflation Outlook, Vasco Cúrdia “Although inflation is currently low, some commentators fear that continued highly accommodative monetary policy may lead to a surge in inflation. However, projections that account for the different policy tools used by the Federal Reserve suggest that inflation will remain low in the near future. Moreover, the relative… Continue Reading

Audit Faults State Dept’s Kabul Embassy Security Management

Via POGO: “A federal audit has found problems with the State Department’s oversight of security at the U.S. embassy in Afghanistan. The audit, issued November 3, showed that, years after the deadly attack on the U.S. consulate in Benghazi, Libya, and long after Washington policymakers pledged to bolster protection for diplomats in danger zones, the State… Continue Reading

New GAO Reports – Financial Audits of SEC, FHFA, Bureau of Consumer Financial Protection

FINANCIAL AUDIT: Bureau of Consumer Financial Protection’s Fiscal Years 2014 and 2013 Financial Statements, GAO-15-146R: Published: Nov 17, 2014. Publicly Released: Nov 17, 2014. FINANCIAL AUDIT: Federal Housing Finance Agency’s Fiscal Years 2014 and 2013 Financial Statements, GAO-15-147R: Published: Nov 17, 2014. Publicly Released: Nov 17, 2014. FINANCIAL AUDIT: Securities and Exchange Commission’s Fiscal Years 2014 and 2013 Financial Statements, GAO-15-166R: Published: Nov 17,… Continue Reading

Consumer Groups Urge USDA to Finalize Labeling of Mechanically Tenderized Meat

“Members of the Safe Food Coalition wrote today to U.S. Department of Agriculture Secretary Tom Vilsack urging him to finalize a rule to label mechanically tenderized beef products by the end of the year. The Secretary must then send the rule to the Office of Management and Budget for final approval. The letter is available… Continue Reading