This Article presents a case study in how complexity arising from the evolu- tion and proliferation of a financial innovation can increase systemic risk. The subject of the case study is the securitization of home loans, an innovation which played a critical and still not fully understood-role...

Intermediaries are a pervasive feature of modern economies. This article draws attention to an under-theorized cost arising from the use of specialized intermediaries — a systematic shift in the mix of transactions consummated. The interests of intermediaries are imperfectly aligned with the...

It is widely assumed that the Federal Reserve is the lender of last resort in the United States and that the Fed's discount window is the primary mechanism through which it fulfills this role. Yet, when banks faced liquidity constraints during the 2007–2009 financial crisis (the Crisis), the...

Financial regulations often encourage or require market participants to hold particular types of financial assets. One unintended consequence of this form of regulation is that it can spur innovation to increase the effective supply of favored assets. This Article examines when and how changes...