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This paper develops a formula to numerically estimate the unsubsidized, fair-market value of the toxic assets purchased with Federal Reserve loans. It finds that subsidy rates on these loans were on average 33.9 percent at origination. In contrast, by the 3rd quarter of the 2010, there was on...
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The economic and financial crisis of the year 2008 highlighted the need for banking sector regulation via the creation of the banking union. The Bank Recovery and Resolution Directive (BRRD) represents an important milestone in the formation of the banking union. It is supposed inter alia to...
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On 3 December EY hosted a SUERF conference on banking reform with Sir Howard Davies, the Chairman of RBS, and Dame Colette Bowe, the Chairman of the Banking Standards Board, as the two keynote speakers. Professor David Miles (Imperial College) gave the SUERF 2015 Annual Lecture on Capital and...
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We study the stability of the banking system after a mortgage shock when a discretionary bailout policy is applied … the alternatives for most shock/bailout pairs. The medium-sized banks policy performs the worst and may be feasible only … for a small number of low shock/low bailout probability pairs. We identify a threshold level after which the bailout costs …
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This paper is the first to assess the Troubled Asset Relief Program (TARP) at loan level by looking at the structure of loan syndicates. While the purpose of TARP was to stimulate the flow of credit during the economic downturn, the low cost of capital could have functioned as a double-edged...
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