Legislative and regulatory actions taken in response to the financial turmoil which occurred between 2007 and 2009 expanded the extent to which financial institution liabilities were protected by federal government guarantees: i.e., these actions expanded the federal financial safety net. How...

Legislative and regulatory actions taken in response to the financial turmoil that occurred between 2007-2009 expanded the extent to which financial institution liabilities were protected by federal government guarantees, i.e., these actions expanded the federal financial safety net. How large...

Failure rates of small commercial banks during the banking crisis of the late 1980s were about 7.6%, which is significantly higher than the 5.7% failure rate during the recent crisis. We compare failure rates in the two periods using a statistical model that allows us to decompose the effect of...

Two of the most significant banking reforms to come out of the banking problems in the late 1980s and early 1990s were the increase in capital requirements from Basel 1 and the prompt corrective action (PCA) provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991...

Banks may receive a subsidy from deposit insurance or from other components of the government-provided banking safety net. Extension (leakage) of a subsidy to banks' nonbank affiliates will only serve to enlarge it. But subsidy enlargement, since it entails expanded risks to taxpayers and...

Contagion-induced bank runs are widely viewed as the cause of widespread bank failures during the Great Depression. Federal deposit insurance was created in 1934 to prevent future contagion-generated bank failures. Yet the cycle of bank failures appears quite similar to an industrial shakeout, a...