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Daily Archives: July 8, 2015

Systemically Important or “Too Big to Fail” Financial Institutions

CRS – Systemically Important or “Too Big to Fail” Financial Institutions. Marc Labonte, Specialist in Macroeconomic Policy. June 30, 2015.
“Although “too big to fail” (TBTF) has been a longstanding policy issue, it was highlighted by the near-collapse of several large financial firms in 2008. Financial firms are said to be TBTF when policy makers judge that their failure would cause unacceptable disruptions to the overall financial system, and they can be TBTF because of their size or interconnectedness. In addition to fairness issues, economic theory suggests that expectations that a firm will not be allowed to fail create moral hazard—if the creditors and counterparties of a TBTF firm believe that the government will protect them from losses, they have less incentive to monitor the firm’s riskiness because they are shielded from the negative consequences of those risks. If so, they could have a

 funding advantage compared with other banks, which some call an implicit subsidy. There are a number of policy approaches—some complementary, some conflicting—to coping with the TBTF problem, including providing government assistance to prevent TBTF firms from failing or systemic risk from spreading; enforcing “market discipline” to ensure that investors, creditors, and counterparties curb excessive risk-taking at TBTF firms; enhancing regulation to hold TBTF firms to stricter prudential standards than other financial firms; curbing firms’ size and scope, by preventing mergers or compelling firms to divest assets, for example; minimizing spillover effects by limiting counterparty exposure; and instituting a special resolution regime for failing systemically important firms. A comprehensive policy is likely to incorporate more than one approach, as some approaches are aimed at preventing failures and some at containing fallout when a failure occurs.”

Making Sense of Mobile Technology – The Integration of Work and Private Life

“Mobile technologies have facilitated a radical shift in work and private life. In this article, we seek to better understand how individual mobile technology users have made sense of these changes and adapted to them. We have used narrative enquiry and sensemaking to collect and analyze the data. The findings show that mobile technology use… Continue Reading

Tests Find Asbestos in Kids’ Crayons, Crime Scene Kits

Asbestos Nation – Bill Walker and Sonya Lunder: “Samples of four brands of children’s crayons and two kids’ crime scene fingerprint kits contained deadly asbestos fibers, according to tests commissioned by EWG Action Fund. The toys, purchased at national retail chains or through online retailers, were tested by two government-certified laboratories, using state-of-the-art equipment. The… Continue Reading

Corporate governance principles for banks

Bank for International Settlements – “Effective corporate governance is critical to the proper functioning of the banking sector and the economy as a whole. While there is no single approach to good corporate governance, the Basel Committee’s revised principles provide a framework within which banks and supervisors should operate to achieve robust and transparent risk management… Continue Reading

Minutes of the Federal Open Market Committee June 16-17 2015

“The information reviewed for the June 16-17 meeting suggested that real gross domestic product (GDP) was increasing moderately in the second quarter after edging down in the first quarter. Labor market conditions improved somewhat further in recent months. Consumer price inflation continued to run below the FOMC’s longer-run objective of 2 percent and was restrained… Continue Reading

Agencies release list of distressed or underserved nonmetropolitan middle-income geographies

“The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation today announced the availability of the 2015 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as community development. Distressed nonmetropolitan… Continue Reading

GAO Reports – Biosurveillance, Crude Oil Export Restrictions, Helium Stewardship Act of 2013, Info Sec, Medicaid, SBA

Biosurveillance: Additional Planning, Oversight, and Coordination Needed to Enhance National Capability, GAO-15-664T: Published: Jul 8, 2015. Publicly Released: Jul 8, 2015: “Naturally-occurring infectious disease or the intentional use of a biological agent to inflict harm could have catastrophic consequences.” Crude Oil Export Restrictions: Studies Suggest Allowing Exports Could Reduce Consumer Fuel Prices, GAO-15-745T: Published: Jul… Continue Reading