While the Dodd-Frank Act (DFA) broadens the regulatory reach to reduce systemic risks to the U.S. financial system, it does not address some important risks that could migrate to or emanate from entities outside the federal safety net. At the same time, it limits the types of interventions by...

The misalignment of corporate bond and credit default swap spreads (the CDS-bond basis) during the 2008 financial crisis is often attributed to corporate bond dealers' failure to provide liquidity. We investigate this common perception using unique data on dealers' trading. We show that...