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Category Archives: Financial System

How the Volcker Rules Became an 8 Billion Annual Business

Via, John Heltman (free to non-subscribers): “The Office of the Comptroller of the Currency — one of the five regulatory agencies that had to write and implement the Volcker Rule — estimated the cost of compliance at just under $1 billion when it conducted a cost-benefit analysis of the proposal back in 2011. A more recent estimate by Bernstein Research put that cost at closer to $8 billion to $10 billion annually. More precise estimates of compliance costs are elusive. Banking industry trade groups don’t keep track of compliance costs for their members and the bigger consulting firms with Volcker compliance practices declined to give specifics when asked for figures of how lucrative those practices are. Tim Keehan, vice president and senior counsel at the American Bankers Association, said there are no firm figures on exact costs associated with the Volcker Rule, but said the OCC’s estimate was likely merely “a starting point” and that compliance costs alone would be “billions.” Even if exact compliance costs are hard to pin down, for a rule that was not envisioned as a core element of financial reform, the Volcker Rule plays an outsized role. Thomas Vartanian, a partner at Dechert LLP and former OCC official, said that the Volcker Rule is one of the biggest compliance burdens in Dodd-Frank, in a league with derivatives regulation or the creation of the Consumer Financial Protection Bureau.”

Deciphering the fall and rise in the net capital share

Brookings Papers on Economic Activity – Matthew Rognlie, MIT Department of Economics: “In the postwar era, developed economies have experienced two substantial trends in the net capital share of aggregate income: a rise during the last several decades, which is well-known, and a fall of comparable magnitude that continued until the 1970s, which is lessContinue Reading

Federal Reserve survey provides information on mobile financial services

News release: “The use of mobile phones to access bank accounts, credit cards, or other financial accounts continued to increase among adults in the United States last year, according to a Federal Reserve Board report, Consumers and Mobile Financial Services 2015. The report is the Board’s fourth looking at how consumers access banking services usingContinue Reading

Large-Dimensional Factor Modeling Based on High-Frequency Observations

Pelger, Markus, Large-Dimensional Factor Modeling Based on High-Frequency Observations (March 17, 2015). Available for download at SSRN: “This paper develops an inferential theory for factor models of large dimensions based on high-frequency observations. We derive a new estimator for the number of factors and derive consistent and asymptotically normal estimators of the loadings andContinue Reading

Reducing Poverty in the United States

Reducing Poverty in the United States: Results of a Microsimulation Analysis of the Community Advocates Public Policy Institute Policy Package, Kye Lippold, March 2015 “A package of five policies—a transitional jobs (TJ) program, a $10.10 minimum wage, expanded earned income tax credits, a tax credit for senior citizens and people with disabilities, and expanded childContinue Reading

The Importance of Addressing Cybersecurity Risks in the Financial Sector

Sarah J. Dahlgren, executive vice president and member of the Bank’s Management Committee, head of the Financial Institution Supervision Group at the Federal Reserve Bank of New York – Remarks at the OpRisk North America Annual Conference, New York City: I am often asked about my list of “things that keep me awake at night,”Continue Reading

New BIS Working Papers – Foreign exchange intervention, Liquidity Squeeze, Global Asset Allocations Shifts, Macroprudential Policy, EMEs

Foreign exchange intervention: strategies and effectiveness – “Foreign exchange intervention has been actively used as a policy tool in many economies in Asia and elsewhere. In this paper, we examine two intervention rules (leaning against exchange rate misalignment and leaning against the wind), utilised with varying degrees of transparency, based on a simple model withContinue Reading

Agencies Provide Feedback on Resolution Plans of Three Foreign Banking Organizations

Firms Required to Address Shortcomings in 2015 Submissions – “The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) on Monday announced that they had completed the reviews of resolution plans submitted in 2014 by three large, foreign banking organizations and had issued feedback letters to each institution. In their review of the resolutionContinue Reading

Explaining the Decline in the Number of Banks since the Great Recession

Federal Reserve Bank of Richmond – March 2015, No. 15-03. Explaining the Decline in the Number of Banks since the Great Recession. Roisin McCord, Edward S. Prescott and Tim Sablik. “The financial crisis of 2007–08 was a major shock to the U.S. banking sector. From 2007 through 2013, the number of independent commercial banks shrankContinue Reading

Work in Retirement: Myths and Motivations

Career Reinventions and the New Retirement Workscape, A Merrill Lynch Retirement Study conducted in partnership with Age Wave. “Retirement used to mean the end of work. But now we’re at a tipping point: a majority of people will be continuing to work after they retire — often in new and different ways. Nearly half (47%)Continue Reading

Gender and Dynamic Agency: Theory and Evidence on the Compensation of Top Executives

 Federal Reserve Bank of New York Staff Report – Gender and Dynamic Agency: Theory and Evidence on the Compensation of Top Executives, March 2015. Stefania Albanesi, Claudia Olivetti, and María José Prados. “We document three new facts about gender differences in executive compensation. First, female executives receive a lower share of incentive pay in total compensation relative toContinue Reading

EBRI Employee Tenure Trends, 1983–2014

“Employee Tenure Trends, 1983–2014″ and “Views on Employment-Based Health Benefits: Findings from the 2014 Health and Voluntary Workplace Benefits Survey.” February 2015, Vol. 36, No. 2  Employee Benefit Research Institute, 2015 The most recent U.S. Census Bureau data show that the overall median tenure of workers—the midpoint of wage and salary workers’ length of employmentContinue Reading