NY Fed on Post-Crisis Reforms
The Federal Reserve Bank of New York's Liberty Street Economics blog is publishing a series entitled, "The Effects of Post-Crisis Banking Reforms." The intro explains, "The financial crisis of 2007-08 exposed many limitations of the regulatory architecture of the U.S. financial system. In an attempt to mitigate these limitations, there has been a wave of regulatory reforms in the post-crisis period, especially in the banking sector. These include tighter bank capital and liquidity rules; new resolution procedures for failed banks; the creation of a stand-alone consumer protection agency; greater transparency in money market funds; and a move to central clearing of derivatives, among other measures. As these reforms have been finalized and implemented, a healthy debate has emerged in the policy and academic communities over the degree to which they have achieved their intended goals and the extent of any unintended consequences that might have arisen in the process. In 2017, the New York Fed initiated a project to study the effects of these post-crisis reforms on bank performance and vulnerability. This project, completed in June 2018, consisted of twelve studies evaluating a wide set of regulatory changes, including the introduction of liquidity regulation, living wills, the supplemental leverage ratio, market value accounting to measure bank capital, and the Consumer Financial Protection Bureau, among other reforms. Each study was carefully designed to identify how these regulatory changes affected the risk-taking, funding costs, and profitability of banks, as well as liquidity levels in debt markets." While the studies published to date deal primarily with bank and bank capital issues, we expect some money market and money fund touches in coming days.
