Wal‐mart and Banks: Should the Twain Meet? A Principles‐based Approach to the Issues of the Separation of Banking and Commerce

White, Lawrence J.

doi:10.1111/j.1465-7287.2009.00158.x

Cited by 4 publications

(3 citation statements)

References 15 publications

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“…The receivership extinguishes the rights of the owners and usually dismisses the senior management who "drove the 32 However, that activity may well be appropriate for a non-financial holding company of a bank. See White (2009b) for a general argument along these lines. 33 U.S. bank regulators require such competency on the part of the senior management for start-up (denovo) banks.…”

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Preventing Bubbles: What Role for Financial Regulation?

White

2011

SSRN Journal

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In the wake of the U.S. housing bubble and collapse and the consequent financial collapse of 2007-2009 and its severe consequences for the U.S. economy, it is unsurprising that there have been calls for policy makers to prevent future asset price bubbles-through the better exercise of monetary policy and/or financial regulatory policy. This essay focuses on financial regulation and argues that such efforts would, at best, be ineffective and, at worst, could squelch productive and efficient asset pricing. Instead, policy makers should focus on better regulatory efforts-better prudential regulation-to ameliorate the consequences of asset bubble deflations on the financial sector.

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Preventing Bubbles: What Role for Financial Regulation?

White

2011

SSRN Journal

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“…For more details, seeWhite (2009e).72 If non-financial enterprises were to be allowed to own banks, TBTF problems would arise only if the specific conditions discussed in Section V were to arise -which seems highly unlikely.…”

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Financial Regulation and the Current Crisis: A Guide for the Antitrust Community

White

2009

SSRN Journal

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The U.S. financial crisis of 2007-2008 has been a searing experience. The popping of a housing bubble exposed the subprime lending debacle, which in turn created a wider financial crisis. In its response to this crisis, the federal government has provided financial assistance to a number of financial institutions that are often described as "too big to fail" (TBTF)-which, to those who associate antitrust with size, seems to bring antitrust potentially into the picture. This paper will offer a guide to the antitrust community that will cover the U.S. financial sector, financial regulation, and the debacle and subsequent financial crisis. The tensions that can arise between financial regulation and antitrust will be highlighted. TBTF is not one of them, however, because TBTF is about size and interconnectedness, but not about competition and market power. Although much progress has been made in removing anticompetitive elements from financial regulation over the past three to four decades, there are still important advances that can be made. The paper concludes by offering a set of policy recommendations for the removal of some of the important remaining elements of financial regulation that impede competition.

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“…For general arguments along these lines, seeWhite (1991).33 Included in capital should be a "slice" of subordinated debt and/or debt that converts to equity ("contingent capital") when capital levels decline.34 However, that activity may well be appropriate for a non-financial holding company of a bank. SeeWhite (2009c) for a general argument along these lines.…”

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Corporate Governance and Prudential Regulation of Banks: Is There Any Connection?

White¹

2012

Research Handbook on International Banking and Governance

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One "narrative" of the financial crisis of 2007-2009 is that poor corporate governance at financial institutions was a major cause of the crisis. An immediate implication of this narrative is that better corporate governance-a better alignment of the interests of senior management with the interests of their shareholders-would have prevented (or at least ameliorated) the crisis. This chapter argues that this corporate governance narrative is largely misguided and reflects an inadequate understanding of modern finance and financial theory. Because of the protections of limited liability, it is in the interests of diversified shareholders of a corporation (including financial institutions) to encourage senior managers to undertake greater risks than is in the interests of the corporation's creditors (or of regulators who may represent depositorcreditors or the interests of society more generally). Consequently, public policy should look to improved prudential regulation, rather than improved corporate governance, for restraining the excessively risky activities of systemically important financial institutions.

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Wal‐mart and Banks: Should the Twain Meet? A Principles‐based Approach to the Issues of the Separation of Banking and Commerce

Cited by 4 publications

References 15 publications

Preventing Bubbles: What Role for Financial Regulation?

Preventing Bubbles: What Role for Financial Regulation?

Financial Regulation and the Current Crisis: A Guide for the Antitrust Community

Corporate Governance and Prudential Regulation of Banks: Is There Any Connection?

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