At AEI, a Monetary Panel Expressed Pessimism About Inflation

Published in Real Clear Markets.

“While their conjectures are as speculative as any vulnerability identified in an official financial stability report, unlike official financial stability reports, they have the freedom to identify government policies and regulatory shortcomings as vulnerabilities,” Kupiec said.

The first panelist to speak was Alex Pollock, distinguished senior fellow at R Street Institute, a free market think tank in Washington, DC. Pollock mentioned several possible causes of the next financial crisis, including errors in judgment by the world’s central banks, a housing-market collapse, a future pandemic, or war. He cautioned that a crisis could be caused by a factor that “nobody sees coming,” which would inevitably hamper state response.

“If the next crisis is again triggered by what we don’t see, the government reaction will again be flying by the seat of their pants, making it up as they go along,” Pollock said.

Read the rest here.

A Public Letter of Concern about the Federal Reserve

Published in National Review.

This is not a partisan issue. Our objections would be equally strong if the Fed involved itself in industrial policy or national security. All Americans benefit from a central bank devoted to effective monetary and regulatory policy. The Fed should refocus on its core missions.

…

Alex J. Pollock — Former Principal Deputy Director, Office of Financial Research

United States Department of the Treasury; Distinguished Senior Fellow, R Street Institute

Read the rest here.

Inflation pain allegedly caused by Biden’s spending demands transparency, Republican says

Published in Fox Business.

But Alex Pollock, a distinguished senior fellow for finance, insurance and trade at the libertarian R Street Institute, told FOX Business that despite the other factors, he “certainly” thinks the president’s policies are playing a large role in the current inflation.

Pollock said the biggest contributor is massive government spending that’s financed by monetizing the debt. And the inflation, Pollock emphasized, is reducing Americans’ “real wages” and cutting the value of their savings.

Read the rest here.

Financial pain in the behemoth assets

Published in The Australian:

“Are banks too big to fail? Of course they are, as much as ever and probably even more so,” says Alex Pollock, who was deputy director of financial research at the US Treasury until February.

...

The US Federal Reserve banks have become the biggest player in the commercial banking system. “They are now huge home lenders; their $US2.2 trillion of mortgage loans is bigger on an inflation-adjusted basis than the entire savings and loans industry before its collapse in the 1980s,” Pollock says.

Governments and regulators quite like a big, concentrated financial system, which explains why little real reform was achieved in the wake of the financial crisis. What did happen was a huge increase in complexity that benefits large incumbents and regulators themselves. Regulators can “manage the system” more easily and treasurers can enjoy lower interest rates. And activist central banks can ensure governments enjoy much lower borrowing costs than otherwise.

“Banking everywhere has been, is and will be a deal between bankers and politicians,” Pollock says.

What Drove Five Decades of Big Changes in Banking?

Published by the Office of the Comptroller of the Currency.

A new post authored by Alex J. Pollock, Hashim Hamandi, and Ruth Leung (2021) on the Office of Financial Research (OFR) website helps answer that question, and it focuses specifically on the changes in U.S. banking that occurred from 1970 to 2020. The analysis includes chartered state and national banks, other depository institutions, and some specialized banking intermediaries, such as the 12 Federal Reserve Banks, and what the authors label the government mortgage complex, which consists of Fannie Mae, Freddie Mac, and Ginnie Mae. It also considers subgroups of banks—in particular, the ten largest commercial banking enterprises.

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Much of this is well known. What is less understood is how the expansion in the generosity of deposit insurance has fueled real estate lending by deposit-financed intermediaries. A typical U.S. bank today has about three-quarters of its lending devoted to real estate loans of some kind. As observed by Pollock (2019), “We still use the term ‘commercial banks,’ but a more accurate title for their current business would be ‘real estate banks.’” This is a far cry from the prohibition on real estate lending for national banks prior to 1913. How does increased deposit insurance generosity affect banks’ mortgage lending?

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Alex J. Pollock (2019), “Bigger, Fewer, Riskier: The Evolution of U.S. Banking since 1950,” The American Interest , February 25.

Alex J. Pollock. Hashim Hamandi, Ruth Leung (2021). “Fifty-Year Changes in the Banking Credit System, 1970-2020.” Post, Office of Financial Research.

In Memoriam: George Kaufman, PhD

Published in Loyola University Chicago.

At a retirement dinner held following the conference, banking leader Alex J. Pollock gave a speech about Kaufman and his contributions to the field entitled “57 Years of Banking Changes and Ideas.” He ended his remarks: “Let us raise our glasses to George Kaufman and 57 years of achievement, acute insights, scholarly contributions, policy guidance and professional leadership, all accompanied by a lively wit. To George!” Read Pollock’s entire speech→

Are Remote Workers More Productive? We Finally Have the Answer

Published in FOND.

Productivity is typically measured by an individual’s output vs. input over a period of time. One example of this is gross domestic product (GDP) per worker, which measures output by person over the course of a year. However, the ways in which we measure productivity today are much more complex.

The New Campus Housing Bubble

Published in Forbes, The Independent Institute, Ohio University College of Arts & Sciences Forum, and Catalyst.

My good friend, banker-scholar Alex Pollock of the R Street Institute, has shared with me some startling new data. High priced, comparatively luxury college student housing has been popular, and in this century lots of apartment complexes have been built with many amenities —granite or marble counter-tops, fancy swimming pools or saunas, etc. With unemployment rates below four percent and  low overall real estate delinquency since recovering from the traumas of a decade or more ago, this sector should be booming. But according to a story published by Wolf Street (Wolf Richter), delinquencies are rising dramatically.

Taxpayers are the GSEs’ true stockholders

Published by the American Enterprise Institute and National Mortgage News.

At a conservative 16 basis points per year, taxpayers would earn some $7 billion annually after taxes, according to one estimate.

Crypto mining and buying under threat from US Congress?

Published in Crypto Disrupt.

Many of the committee members warned that having such a central system could amplify the risk of bank runs with several major institutions already recoiling against the idea. A senior person at the R Street Institute, Alex Pollock, slammed the idea of CBDC at the hearing on Wednesday when he said it is “a terrible idea – one of the worst financial ideas of recent times.”

The Parallel Democratic Dilemmas of the Court and the Fed

Published by Law & Liberty.

As a result, critics like Alex Pollock have argued: “When a crisis hits, their own interventions usually, if not typically, create the conditions for future crises.” One interesting result of comparing the Supreme Court to the Fed is to wonder whether this criticism should apply to the Court as well. That is, one might question the institutional capacity of the Court to predict the long-term constitutional needs of the republic and use their discretion to update the law accordingly.

Too big to fail or bail

From Peacefare:

On June 4 the American Enterprise Institute hosted a panel discussion titled “Europe’s Populist and Brexit Economic Challenge” moderated by Alex J. Pollock of the R Street Institute and featuring Lorenzi Forni (Prometeia Associazione), Vitor Gaspar (International Monetary Fund), Desmond Lachman (AEI) and Athanasios Orphanides (MIT). The panel discussion was centered around Italy’s rising populism and economic woes, with a short discussion about the possibility of a no-deal Brexit causing damage to the European economy.

PRO: Taxpayers shouldn’t get stuck with a $1.5 trillion loan default tab

From Richmond Times-Dispatch, Austin American-Statesman, Chicago Tribune, and The Guam Daily Post.

As the noted financial scholar Alex J. Pollock, former president and CEO of the Federal Home Loan Bank of Chicago, suggests: Make the schools pay 20% of the debt obligations of former students facing loan delinquency or default.

Treasury’s Phillips Says GSEs Have Paid Back Taxpayers

Published in Seeking Alpha.

In the video above he’s responding to a question from Alex Pollock, who put together an article on the 10% moment. The theory behind the 10% moment is to ignore the accounting fraud and the net worth sweep and to calculate the cash ROI on taxpayer dollars invested into Fannie and Freddie. Alex suggests that the current cash on cash ROI is 11.5%. His logic is that because this exceeds the original 10%, the government can say it’s been paid back. Craig Phillips calls Alex his hero for coming up with this concept and says that taxpayers have been paid back.

House Report on Consumers First Act

Published by the House Financial Services Committee.

In the 115th Congress, the Committee held a hearing entitled “A Legislative Proposal to Create Hope and Opportunity for Investors, Consumers and Entrepreneurs,” on April 26 and April 28, 2017. Testifying were Mr. Peter J. Wallison, Senior Fellow and Arthur F. Burn Fellow, Financial Policy Studies, American Enterprise Institute; Dr. Norbert J. Michel, Senior Research Fellow, Financial Regulations and Monetary Policy, The Heritage Foundation; The Honorable Michael S. Barr, Professor of Law, University of Michigan Law School; Mr. Alex J. Pollock, Distinguished Senior Fellow, The R Street Institute

Is Dodd-Frank council evolving, or throwing in the towel?

Published in the American Banker.

“In my judgment at the time” the FSOC was established was that “it was not well constructed,” said Alex Pollock, a senior fellow at the R Street Institute. “It’s set up to be naturally a logrolling operation among bureaucratic agencies. It’s a very hard kind of structure to get to work well, because everybody wants to defend his own territory from encroachment by somebody else.” 

Pollock said the council’s ability to prevent crises should not be the sole criteria for judging the shift toward an activities-based approach, because the alternative of designating firms one by one might not succeed, either. “I think it’s worth a try.”

Cuestionan definición de servicios esenciales

Published in Metro PR.

Amanda Rivera, directora ejecutiva del Instituto del Desarrollo de la Juventud de Puerto Rico; Ana Cristina Gómez, profesora de la Escuela de Derecho de la Universidad de Puerto Rico (UPR), y Alex Pollock, del R Street Institute, también presentaron sus ponencias ante el comité cameral.

Demócratas y republicanos parecen ir por caminos distintos sobre la ley Promesa

Published in El Nuevo Dia.

El experto en finanzas Alex Pollock, del grupo R Street y quien fue invitado a la audiencia por la minoría republicana, recomendó que la JSF tenga más poderes y pidió al Congreso nombrar un jefe de finanzas que también funcione por encima del gobierno electo de Puerto Rico.

Como varios congresistas republicanos, Pollock criticó que el gobierno de Puerto Rico no haya publicado los informes financieros auditados de 2016, 2017 y 2018.

U.S House Natural Resources Committee Holds Hearing on Puerto Rico

Published in The Weekly Journal.

The U.S. House Committee on Natural Resources holds a hearing today on the status of Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA): Lessons Learned Three Years Later.

Natural Resources committee Chairman Raúl Grijalva presides the 10 a.m. oversight hearing at the Longworth House Office Building.

Gov. Ricardo Rosselló, Natalie A. Jaresko, Executive Director, Financial Oversight and Management Board for Puerto Rico; Martín Guzmán, Non-Resident Senior Fellow for Fiscal Policy, Espacios Abiertos; Amanda Rivera, Executive Director, The Institute for Youth Development of Puerto Rico; Ana Cristina Gómez-Pérez, Associate Professor, University of Puerto Rico; and Alex J. Pollock, Distinguished Senior Fellow, R Street Institute are part of the witness list.

This Week in Financial Regulation, March 6th

Published in the Captured Economy.

The American Interest gives the history of the banking industry since the 1950s. As the Federal Reserve gained more authority, the industry became riskier and more concentrated.