It’s Time to Regulate Stablecoins as Deposits and Require Their Issuers to Be FDIC-Insured Banks

 In November 2021, the President’s Working Group on Financial Markets (PWG) issued a report analyzing the rapid expansion and growing risks of the stablecoin market.[1]  Stablecoins are digital assets that claim to maintain a “stable” value with reference to a designated currency (typically the U.S. dollar) or some other asset, index, or formula.  PWG’s report concluded that […]

The Pandemic Crisis Shows that the World Remains Trapped in a “Global Doom Loop” of Financial Instability, Rising Debt Levels, and Escalating Bailouts

In January 2020, I completed a book analyzing the financial crises that triggered the Great Depression of the 1930s and the recent Great Recession.  In that book, I argued that the world’s financial system was caught in a “global doom loop” at the beginning of 2020.  Bailouts and economic stimulus programs during and after the global financial crisis of […]

The OCC’s and FDIC’s Attempts to Confer Banking Privileges on Nonbanks and Commercial Firms Are Unlawful and Threaten to “Bankify” Our Economy

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have adopted several recent measures that attempt to confer benefits and privileges of banks on nonbank providers of financial services and commercial firms.  Those initiatives are unlawful and dangerous because they will enable nonbanks and commercial firms to undermine […]

Taming the Megabanks: Why We Need a New Glass-Steagall Act

Banks became major participants in U.S. securities markets twice in the past century – during the 1920s and after the mid-1990s. Both times, banks with “universal banking” powers originated risky loans and packaged them into securities that were sold to investors around the world. Both times, universal banks promoted unsustainable credit booms that led to […]

The OCC Should Withdraw Its Proposed “True Lender” Rule

The Office of the Comptroller of the Currency (OCC) recently issued a proposed “true lender” rule.[1] The proposed rule would establish a two-part test for determining whether a national bank or federal savings association “makes a loan and is the ‘true lender’ in the context of a partnership between a bank and a third party, […]

The FDIC Should Not Allow Commercial Firms to Acquire Industrial Banks

Industrial banks and industrial loan companies (collectively referred to as “ILCs”) are FDIC-insured, state-chartered depository institutions. In 1987, ILCs received a statutory exemption from the definition of “bank” under the Bank Holding Company Act (“BHC Act”). Congress did not explain the purpose of the 1987 exemption, but many have argued that the exemption allows commercial […]