PERI
Research AreasFinance, Jobs & MacroeconomicsSAFER Financial Reform

SAFER: A Committee of Economists and other Experts for Stable, Accountable, Fair and Efficient Financial Reform

SAFER presents the views of economists and analysts on financial regulation and reform. Our goal is to broaden perspectives on financial regulation in order to inform the public debate and influence policy making.

June 2012: A Bold Initiative to Restore Central Banks as Agents of Economic Development

In this SAFER Policy Note, Gerald Epstein describes a newly proposed policy shift at the Argentine Central Bank. In a bold move, the government of Argentina has fought against the neo-liberal conventional wisdom that the only legitimate task for central banks is to control inflation. They have broadened the mandate of the Argentine Central Bank to include economic growth and financial stability, and empowered it to use more tools to support credit allocation to promote productive investment and job creation.

>> Download the SAFER Policy Note
>> Read an open letter from U.S. economists in support of the Central Bank’s new mandate (and a similar effort in the United Kingdom)

March 2011: Comment Regarding Position Limits for Derivatives

In response to a U.S. Commodities Futures Trading Commission notice of proposed rulemaking, Robert Pollin and James Heintz generally endorse the Commission's position, but discuss three potential difficulties it raises: 1) the relationship between liquidity and price stability in asset markets in general and commodity markets in particular; 2) formulas for setting position limits; and 3) difficulties in identifying which traders should legitimately qualify for exemptions.

>> Download Robert Pollin and James Heintz's "Comment Regarding Position Limits for Derivatives"

December 2010: Additional Comments on Pending Financial Reform Implementation

Robert Pollin & James Heintz recommend that the Commodities Futures Trading Commission take a strong position on the regulation of position limits for physical commodity futures contracts and swaps, and that the CFTC require data reporting on such trades, in order to provide an empirical foundation for future position limits. Jennifer Taub and Americans for Financial Reform comment on the Treasury’s consideration of whether to exempt foreign exchange swaps and forwards from the definition of ‘swap’ under the Commodity Exchange Act, strongly supporting their inclusion.

>> Download Robert Pollin & James Heintz's "Comment Regarding Position Reports for Physical Commodity Swaps"
>> Download Jennifer Taub and Americans for Financial Reform's "Comment Regarding Determination of Foreign Exchange Swaps and Forwards"

November 2010: Comments on Pending Financial Reform Implementation

As the implementation of the Dodd-Frank Financial Reform Act approaches,  government agencies responsible for putting the act into practice are seeking input from the public on the details of how the legislation should be translated into rule-making and policy. Four PERI/SAFER economists and their colleagues at Americans for Financial Reform have submitted comments which emphasize how key elements of the reform must be implemented with teeth in order to have any real effect on banks and financial trading, and their reverberations throughout the world.

>> Download Robert Pollin's "Comments Regarding Regulatory Treatment of Agricultural Swaps"
>> Download Gerald Epstein's "Comment on Implementation of the 'Volcker Rule'"
>> Download Jane D'Arista's ""Comment on Supervision and Regulation of Certain Nonbank Financial Companies"
>> Download Jennifer Taub's "Comment on Supervision and Regulation of Certain Nonbank Financial Companies"

October 2010: Gerald Epstein on what to watch for in the implementation of the 'Volcker Rule'

If successfully implemented, the “Volcker Rule”/Merkley-Levin Provisions of the Dodd-Frank Act can reduce the likelihood of future tax payer bailouts of financial firms and help refocus large complex financial institutions away from shorter-term more speculative investments and toward longer-term and more socially productive activities. Epstein enumerates the specific language which needs to be watched, and makes recommendations for the interpretation and enforcement of the Rule.

>> Read "The Volcker Rule: Rule Implementation Issues and Study Guide"
>> Read the brief Policy Note on this topic

Policy Brief: Size Cap Triggers as a Key Component of Financial Resolution

Michael Konczal and Arjun Jayadev argue that the choice between a size cap and a resolution authority regime is a false one--both have critical roles to play in creating a safe a stable financial regulatory system.

>> Download "Size Cap Triggers as a Key Component of Financial Resolution"

Policy Note: Strong "Volcker Rule" Needed to Tame Proprietary Trading

James Crotty, Gerald Epstein, and Iren Levina of PERI and the University of Massachusetts, Amherst take on financial industry claims that proprietary trading is "not a big deal." In fact, they argue in this SAFER Policy Note that proprietary trading constituted one- to two-thirds of all revenues in some large banks--activities that contributed directly to the financial crash. To be effective, a "Volcker Rule" limiting proprietary trading must cast a broad net on the trading activities of banks and other financial institutions.

>> Download "Proprietary Trading is a Bigger Deal Than Many Bankers and Pundits Claim"

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SAFER Resources

SAFER is funded by a generous grant from the Nathan Cummings Foundation.