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Deadline for financial regulatory reform

Dick Taffe — Thu, 24 Jun 2010 19:56:28 +0000

Congress is down to its self-imposed deadline to come up with a financial regulatory reform bill, leaving some of the most controversial provisions — like how to deal with the trading of derivatives — to the final hours. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, says that a Congress that couldn’t bring itself to enact meaningful reform legislation during the height of the financial crisis now seems to be panicking to pass what he sees as deeply flawed bill.

“Having lost the moment to make bold changes, the legislative process has become all about the November elections and very little about sound public policy. Congress may well meet today’s deadline, but we won’t be the better for it.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Financial regulatory reform showdown

Dick Taffe — Mon, 21 Jun 2010 17:37:05 +0000

House and Senate conferees hope to wrap up this week the final version of financial regulatory reform legislation to send to President Obama, with chairmen Barney Frank and Chris Dodd delicately trying to compromises without losing votes for the overall package. What do about the trading of derivatives – the complex financial packages which helped sink the economy – remains up in the air. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, says the proposal currently in the Senate version but objected to by both the House negotiators and the White House, wouldn’t be the best for taxpayers fearing another bailout but would be better than nothing.

“If derivatives trading is such a socially useful and profitable activity ($23 billion in revenue among the five banks that dominate the market) why can’t it exist outside of bank holding companies? The answer to the question is that it could exist in a different, nonbank setting, but, without the backing of the taxpayers, the activity would have to shed its casino-like features.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

The FDIC’s deposit-insurance limit

Dick Taffe — Wed, 16 Jun 2010 20:24:08 +0000

Congressional negotiators working out difference between the House and Senate financial reform bills are hammering out compromises right and left. One would permanently (and retroactively to January 2008) move from $100,000 to $250,000 the deposit insurance on individual bank accounts. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, doesn’t think the raised limit is a good idea.

“Permanently raising the federal deposit insurance ceiling from $100,000 to $250,000 when the Federal Deposit Insurance Fund is over $20 billion in the red is irresponsible. By raising taxpayer-funded deposit insurance coverage … it seems the [banking] lobbyists’ messages are getting through loud and clear.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

FDIC floats bank-reform proposals

Dick Taffe — Tue, 11 May 2010 22:43:12 +0000

The Federal Deposit Insurance Corp. is proposing that the top 40 U.S. banks — with assets totaling $8.3 trillion — submit “living wills” to show how they could be split off from parent companies and wound down. In parallel with Congressional reform efforts, the FDIC also is proposing that those selling securitiezed assets retain 5% of the risk on those assets. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, says the FDIC’s proposal preempt several sister regulatory agencies.

“If the FDIC was attempting to make the case for federal regulatory consolidation, its ill-timed proposals hit the mark.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu