Notes from the Vault

The Center for Financial Innovation and Stability's series, Notes from the Vault

Central Banking in the Shadows
Paula Tkac
December 2014

As new financial regulations become phased in and monetary policy normalization gets closer, questions remain about the future role of the Federal Reserve. Will traditional banking become less central to central banking and should the Fed move into the shadows?

Nonbank Financial Firms and Financial Stability
Larry D. Wall
November 2014

The financial crisis highlighted that distress at nonbank financial firms can have a negative impact on financial stability. A recent conference hosted by the Atlanta Fed provided a variety of perspectives on the topic.

Monetary Policy, Economic Modeling, and Unknown Unknowns
Mark Fisher
October 2014

The Federal Open Market Committee has said it intends to maintain a large volume of excess reserves for some time and rely on other tools to raise short-term interest rates. This post highlights the potential for surprises when relying on new tools in an unfamiliar environment.

Should Financial Stability Be a Goal of Monetary Policy?
Larry D. Wall
September 2014

There has been increased debate about using monetary policy to promote financial stability since the financial crisis. This post posits that the theoretical case for using policy to support stability is strong, but practical problems remain.

Bail-in Debt: Will the Supervisors Pull the Trigger in Time?
Larry D. Wall
August 2014

The United States and the European Union are planning on using bail-in debt to help reduce taxpayer exposure to systemically important financial institutions. This post discusses the importance of timely resolution for this approach to be effective.

State of Distress?
Paula Tkac
July 2014

Systemically important financial institutions (SIFIs) like large banks and nonbank financial firms are required to have credible resolution plans in case they fail. Should U.S. states have a similar plan in place?

Was the Third Amendment to the GSE Bailouts Fair?
Larry D. Wall
May 2014

The Treasury amended the terms of its GSE bailouts in August 2012 in a way that effectively terminated private shareholders' interest in the firms. This post analyzes that agreement and its fairness to taxpayers and the GSEs' private shareholders.

Better but Still Imperfect Financial Information
Larry D. Wall
April 2014

The financial crisis highlighted the importance of good information to reduce the frequency and severity of future crises. One session at the Atlanta Fed's recent Financial Markets conference critically analyzed postcrisis changes in the information environment.

Have the Government-Sponsored Enterprises Fully Repaid the Treasury?
Larry D. Wall
March 2014

Fannie Mae and Freddie Mac have paid dividends equal to the Treasury's total purchase of their senior preferred stock. This post contends these payments fall far short of the economic value of the Treasury's support.

Two Drivers of Financial Innovation
Larry D. Wall
February 2014

Financial innovation is likely to accelerate as the postcrisis regulatory environment stabilizes. Two of the biggest drivers of past innovation, technology and regulation, are likely to continue to play an important role in future innovation.

Simple Concept, Complex Regulation
Larry D. Wall
January 2014

Simple regulatory concepts often result in long, complex regulations. The reason why that happens has important implications for the future of prudential regulation.

Notes from the Vault was on hiatus after the March/April 2012 post; it restarted in March 2013.

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