Robert Pozen Too Big to Save How to Fix the U.S. Financial System (2009)

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Do celu tam się wysiada. Lec Stanisław Jerzy (pierw. de Tusch-Letz, 1909-1966)
A bogowie grają w kości i nie pytają wcale czy chcesz przyłączyć się do gry (. . . ) Bogowie kpią sobie z twojego poukładanego życia (. . . ) nie przejmują się zbytnio ani naszymi planami na przyszłość ani oczekiwaniami. Gdzieś we wszechświecie rzucają kości i przypadkiem wypada twoja kolej. I odtąd zwyciężyć lub przegrać - to tylko kwestia szczęścia. Borys Pasternak
Idąc po kurzych jajach nie podskakuj. Przysłowie szkockie
I Herkules nie poradzi przeciwko wielu.
Dialog półinteligentów równa się monologowi ćwierćinteligenta. Stanisław Jerzy Lec (pierw. de Tusch - Letz, 1909-1966)

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.The jurisdiction of suchan agency would overlap with the functions of every federal and stateregulator of financial firms, thus leading to conflict, confusion, and delay.Congress should merge a few of the fi nancial regulatory agencies,such as the SEC with the CFTC and the Comptroller of the Currencywith the OTS.But Congress should resist calls for consolidating allfi nancial regulators into one umbrella federal agency.The huge transi-tion costs would outweigh the potential benefits of coordination.Morefundamentally, the addition of another layer of bureaucracy is likely toimpede quick action when needed to deal with financial innovation orto respond to a financial crisis.The Treasury now distinguishes between banks receiving redeem-able preferred stocks and those receiving exceptional assistance.If theTreasury is going to contribute capital to relatively healthy banks, itshould employ the model for redeemable preferred stock with divi-dend and warrant levels based on market practices.But it is unclearwhy recapitalizing healthy banks is needed.Instead, the federal govern-ment should articulate its criteria for too-big-to-fail, and explain theirapplication to every federal bailout of a financial institution.To provide taxpayers with an equitable stake in a mega bank that needsexceptional assistance, the Treasury should contribute capital by purchasingcommon shares.As a result, the Treasury is likely to hold a majority own-ership of the bank s common shares, while the ownership interests of othershareholders will be reduced.This is not permanent nationalization in thesocialism sense; this is temporary majority ownership by the governmentuntil it can dispose of the mega bank.By owning a majority of the trou-bled mega bank s shares, the Treasury can enjoy most of the bank s upsidegains as well as absorbing most of its downside losses.390 t oo bi g t o s a ve ?With majority ownership of seriously troubled banks by the federalgovernment, it can divide them into good banks and bad banks.Thegood banks would return to the normal business of taking deposits andmaking loans; the bad banks would work out and sell toxic assets overseveral years.If the U.S.Treasury and other existing securities holderswere given equal ownership in interest in both banks, taxpayers wouldparticipate in the potential upside as well as shoulder losses.Moreover,splitting a troubled institution in this manner would avoid the intractableproblem of setting a fair price now for the sale of its toxic assets.This splitting of a troubled institution into two banks is a muchbetter approach than the creation of heavily subsidized public privatepartnerships to try to buy toxic assets.These partnerships are anotherexample of one-way capitalism: Private investors receive 50 percentof the upside but little of the downside on toxic assets that are actu-ally purchased.Moreover, the partnerships are likely not to set a marketprice on many toxic assets, because the government will not providegenerous subsidies to buy them on a regular basis.The government s focus on recapitalizing banks and buying their toxicassets seems to be based on the assumption that banks are the primaryoriginator of new loans.In fact, banks accounted for only 22 percent ofthe credit extended in the United States.The main cause of reduced lend-ing has been the collapse of the loan securitization process, which allowsbanks and nonbanks to sell loans and re-lend the cash proceeds multipletimes.The volume of new issues of securitized loans has fallen off a cliff,from $100 billion a month in 2006 to almost zero at the end of 2008.To revive the process of securitizing loans, the United States needsto establish proper incentives at each stage of the process.We need toensure that mortgages are appropriate for the resources of borrowers,and that mortgage brokers have skin in the game when they sell loans.We need to control the conflicts of interest of credit-rating agencies andreformulate the capital requirements for bank sponsors of special pur-pose entities (SPEs) that issue asset-backed securities.But all asset secu-ritization should not be forced back on to the balance sheets of banks.Instead, bank sponsors should publicly disclose and back with capitaltheir continuing or contingent obligations to any SPE they sponsor.In response to the fi nancial crisis, the federal government has sub-stantially increased its intervention into the financial markets.Although The New Structure of U.S.Financial Regulation 391such intervention is justified in certain cases, federal guarantees of debtoffering are too extensive.To avoid moral hazard, the FDIC should guar-antee 90 percent, rather than 100 percent, of debt offerings by banks andthrifts.Further, Congress should not extend beyond 2013 the higherlimits on FDIC deposit insurance.The previous limits covered 98 per-cent of all depositors.The United States should move away from a finan-cial sector with broad-based government guarantees to one with marketdiscipline exerted by sophisticated and at-risk investors in bank debt.The federal government should not be encouraging mergers amonglarge institutions in the financial sector, which is now dominated by ahandful of mega banks.The Justice Department should reject merg-ers that are likely to create more mega banks that are too big to fail.However, we should not attempt to increase competition in the financialsector by reinstating the barriers of the Glass Steagall Act to the securitiesactivities of banks.Freestanding investment banks present systemic risksbecause they have limited sources of short-term liquidity: commercialpaper and repurchase agreements.Banks with securities powers can alsoobtain short-term financing through Fed loans and retail deposits.Given the decline in investor discipline and market competition, themonitoring of financial institutions has been left mainly to federal regu-lators.But there are limits to the effectiveness of any federal regulator inlight of the fast pace of financial innovation and complexity of finan-cial transactions.On a regular basis, the outside directors of a mega bankshould be responsible for monitoring its activities.However, most outsidedirectors of mega banks are not fi nancial experts, do not spend enoughtime on board matters, and do not have a large equity stake in theseinstitutions [ Pobierz całość w formacie PDF ]

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