Law Commons^™

Confronting Financial Crisis: Dodd-Frank's Dangers And The Case For A Systemic Emergency Insurance Fund, Jeffrey N. Gordon, Christopher Muller

Faculty Scholarship

Inherent tensions in the financial sector mean that episodes of extreme stress are inevitable, if unpredictable. This is true even when financial regulatory and supervisory regimes are effective in many respects. The government's capacity to intervene may determine whether distress is confined to the financial sector or breaks out into the real economy Although adequate resolution authority to address a failing financial firm is a necessary objective of the current regulatory reforms, a firm-by-firm approach cannot address a major systemic failure. Major blows to the financial system, such as the financial crisis of 2007-2009, may require capital support of the …