Economic Policy Commons^™

Time To Throw Away The Old Economic Development Playbook, Hrishue Mahalaha

eJournal of Public Affairs

Rural communities are struggling to establish a sound economic footing in the age of globalization. The article suggests that community leaders consider a more expansive view on how to recraft a community north star. Based on the work that the author has conducted over the last 5 years in various rural communities in Missouri, the article also summarizes a set of key learnings and practical steps that local leaders can take to catalyze positive change.

“You Never Know” Work And Precarity In Las Vegas Before And During Covid-19, Richard Reeves, Morgan Welch, Hannah Van Drie

Policy Briefs and Reports

In this brief we examine work and work-based policies in Las Vegas, Nevada – a theme that emerged strongly from focus group data collected in the fall of 2019. The middle-class Americans we talked with were concerned about upward mobility, the changing landscape of work as a result of automation and skills training, scheduling uncertainty, and employee benefits like time off and paid leave. The COVID-19 pandemic highlighted and exacerbated these pre-existing issues for many workers. Much of the policy agenda in the last year has been understandably reactionary, as policymakers addressed immediate issues such as unemployment insurance, keeping workers …

Metro Monitor 2021: Las Vegas And Reno, Eshaan Vakil, Katie M. Gilbertson, Emmanuel A. Berrelleza, Caitlin J. Saladino, William E. Brown Jr.

Economic Development & Workforce

This fact sheet measures changes in Nevada’s economic growth performance indicators using data provided by the Brookings Institution’s Metro Monitor analysis. Researchers at Brookings’ Metropolitan Policy Program measure various indicators of economic well-being across 192 metropolitan statistical areas (MSAs) for a 10-year period (from 2009-2019) to provide a thorough time series analysis of isolated variables. This fact sheet presents data for the Las Vegas-Henderson-Paradise, NV MSA and the Reno, NV MSA.

Conducting Field Work With Microfinance Programs’ Participants In A Non-Western Setting: A Reflexive Account, Mohammad Shahjahan Chowdhury

The Qualitative Report

While volumes of procedural guidelines are available on how to conduct fieldwork, in practice a researcher encounters various challenges and dilemmas in the field. This paper presents a holistic view of the puzzles this researcher encountered in gaining access, negotiating positionality, application of the pre-determined methodology, and ensuring ethics during his fieldwork with microfinance program participants in a non-Western setting. This paper contributes to the fieldwork literature by enhancing a researcher’s understanding of the unanticipated challenges.

2020 Most Dynamic Micropolitans In The Mountain West, Kelliann Beavers, Katie M. Gilbertson, Caitlin J. Saladino, William E. Brown Jr.

Cities & Metros

This fact sheet draws from the “Most Dynamic Micropolitans 2020” report released by Heartland Forward, “an institute for economic renewal […] with a mission to improve economic performance in the center of the United States.” In this report, Heartland Forward offers the Most Dynamic Micropolitan Index to analyze the economies of smaller communities for a total of 515 micropolitan areas nationally. This fact sheet includes information on job growth, annual pay growth, and personal income growth for micropolitan areas in the Mountain West region.

Evaluating The Economics Of Gluten-Free Households, Keia Mornys Alicia Jones

Graduate Theses and Dissertations

Over the past two decades, the diagnoses of gluten allergies and celiac disease has increased significantly. Although there has been no development of a cure for either ailment, these conditions can be managed by the elimination of glutenous foods from a person’s diet. In previous studies, the financial cost of replacing or excluding glutenous foods was higher than the financial cost of diets that do not exclude gluten. The objective of this study is to examine the differences in the economic feasibility of a conventional diet in comparison to a gluten-free diet. Using a sample of foods and prices from …

Lessons Learned: Neel Kashkari, Yasemin Esmen

Journal of Financial Crises

Neel Kashkari was the Interim Assistant Secretary of the Treasury for Financial Stability between October 2008 and May 2009. He oversaw the architecture and administration of the Troubled Asset Relief Program (TARP) during this time. This “Lessons Learned” is based on a phone interview with Mr. Kashkari.

Lessons Learned: Phillip Swagel, Yasemin Esmen

Journal of Financial Crises

Phillip Swagel was Assistant Secretary for Economic Policy at the U.S. Treasury between 2006 and 2009. During this time, he advised Treasury Secretary Hank Paulson as his chief economist, served as a member of the TARP Investment Committee, and played an important part in the conservatorship of Fannie Mae and Freddie Mac. This “Lessons Learned” is based on a phone interview with Mr. Swagel.

Lessons Learned: James Wigand, Sandra Ward

Journal of Financial Crises

A finance specialist and longtime Federal Deposit Insurance Corporation (FDIC) executive, James Wigand served as Deputy Director, Franchise and Asset Marketing, at the FDIC from 1997 to 2010, a period encompassing the global financial crisis of 2007-09. Wigand oversaw the resolution of all insured-depository institutions during the crisis, arranging acquisitions of troubled banks or liquidating them. He also acted as liaison between the chairman and board of directors of the FDIC. In 2010, in the aftermath of the crisis, Wigand was named director of the newly created Office of Complex Financial Institutions at the FDIC, an office formed under the …

Lessons Learned: Arthur Murton, Sandra Ward

Journal of Financial Crises

Arthur Murton joined the Federal Deposit Insurance Corp. in 1986 as a financial economist and rose through the ranks to become Director of the Division of Insurance and Research, a post he held from 1995 to 2013 and which he steered through the financial crisis of 2007-09. Murton participated in the important interagency discussions held on Columbus Day weekend in 2008 that led to the establishment of breakthrough programs that proved critical in stabilizing financial markets. This “Lessons Learned” summary is based on an interview with Mr. Murton about his crisis experience.

Lessons Learned: Michael Krimminger, Charles Euchner, Maryann Haggerty

Journal of Financial Crises

Michael Krimminger was Special Advisor for Policy and General Counsel at the Federal Deposit Insurance Corporation during the global financial crisis. In that role, he provided legal and policy advice on the writing and implementation of the Dodd-Frank Act, including its systemically important financial institution provisions, living wills, capital markets and capital, and structured finance requirements. He is now a partner at Cleary Gottlieb Steen & Hamilton LLP. This “Lessons Learned” is based on an interview with Mr. Krimminger.

Lessons Learned: Diane Ellis, Sandra Ward

Journal of Financial Crises

Diane Ellis served as Deputy Director, Insurance and Research, at the Federal Deposit Insurance Corp. during the financial crisis of 2007-09. The FDIC played a critical role in stabilizing financial conditions and establishing confidence in the financial markets by guaranteeing newly issued debt on a temporary basis for banks and thrifts as well as financial holding companies and eligible bank affiliates. The agency also fully guaranteed certain non-interest-bearing transaction deposit accounts. Ellis played an important role in implementing the Temporary Liquidity Guarantee Program that proved so critical in stemming the crisis. This “Lessons Learned” is based on a phone interview …

Comment Letters May Have Helped Shape Federal Reserve’S Municipal Liquidity Facility (Mlf) And Main Street Lending Program (Mslp), Steven Kelly

Journal of Financial Crises

YPFS Archive Notes highlight noteworthy content or additions to the YPFS Resource Library.

In support of the YPFS efforts to archive primary and secondary materials that shed light on financial crises, this YPFS Archive Note highlights the addition of public comment letters solicited by the Federal Reserve to evaluate two of its proposed emergency lending facilities, the Municipal Liquidity Facility (MLF) and the Main Street Lending Program (MSLP) designed to help the US economy endure the financial stresses caused by the coronavirus pandemic. The released correspondence reflects a wide array of congressional and stakeholder concerns. Ultimately, the Fed incorporated …

Hungary: Magyar Reorganizációs És Követeléskezelő Zrt (Mark Zrt.), Mallory Dreyer

Journal of Financial Crises

Hungary saw a surge in commercial real estate (CRE) lending prior to the Global Financial Crisis. By 2014, the banking sector was saddled with a high ratio of nonperforming CRE loans and repossessed property, though Hungarian banks remained solvent with high capital adequacy ratios. The central bank of Hungary, the MNB, announced the creation of an asset management company, Magyar Reorganizációs és Követeléskezelő Zrt. (MARK), to purchase nonperforming CRE assets from Hungarian banks on a voluntary basis, to clear their balance sheets and allow for increased lending. MARK was fully-owned by the MNB, which provided MARK’s share capital and a …

Spain: Sociedad De Gestión De Activos Procedentes De La Reestructuración Bancaria (Sareb), David Tam, Sean Fulmer

Journal of Financial Crises

In the wake of the Global Financial Crisis, the Spanish real estate market struggled to recover, which posed significant issues for savings banks that had an outsized exposure to the real estate sector. The Spanish government created Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria (SAREB) in 2012 to buy impaired real estate assets from troubled banks and sell them over a 15-year period using funds from an up to €100 billion ($123 billion) loan from the European Financial Stability Facility. Its mandate was “to help clean up the Spanish financial sector and, in particular, the banks that …

Bank Assets Management Company (Bamc), Alexander Nye

Journal of Financial Crises

Slovenia weathered the initial shock of the Global Financial Crisis (GFC) of 2008 well enough to return to growth in 2010. However, non-performing loans continued mounting, banks experienced significant losses, and credit growth turned negative in a credit crunch. Slovenia entered a recession in 2011, experiencing the second largest GDP decline in the euro area. It was not certain whether Slovenia had the fiscal space to resolve these problems without requesting a Troika bailout from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF). In late 2012 the government tried to prevent such a program by …

United Kingdom Asset Resolution Limited (Ukar), Aidan Lawson

Journal of Financial Crises

As the Global Financial Crisis began to unfold, the United Kingdom (UK) saw two of its largest mortgage lenders in Bradford & Bingley (B&B) and Northern Rock begin to weaken dramatically under the pressure that housing and financial markets were facing. Northern Rock and B&B both faced severe funding problems due to a worsening global credit crunch and both would be nationalized in 2008. Despite this effort, the crisis continued to worsen globally, and the UK government created UK Asset Resolution Limited (UKAR) on October 1, 2010. This organization’s goal was to wind down and maximize the return on the …

Asset Management Corporation Of Nigeria (Amcon): Asset Management, Pascal Ungersboeck, Corey N. Runkel

Journal of Financial Crises

Nigeria experienced the Global Financial Crisis as a dramatic decline in the price of crude oil and a burst stock market bubble. These losses were compounded by a high level of margin lending, resulting in large numbers of nonperforming loans (NPLs) for Nigerian banks. The government established the Asset Management Corporation of Nigeria (AMCON) in July 2010 to purchase NPLs and inject capital in insolvent banks. In three purchases between December 2010 and December 2011, AMCON acquired loans with face value ₦4.02 trillion ($26.8 billion) for ₦1.76 trillion. As a result, NPLs in Nigerian banks fell from a peak of …

The Thai Asset Management Company (Tamc), Mallory Dreyer

Journal of Financial Crises

The combination of the collapse of a midsize bank due to fraud and the failure to meet projected exports exposed weakness in the Thai economy in 1996. Pressure on the baht grew in 1997, and the Thai government attempted to defend its currency by depleting foreign reserves. Thailand floated the baht in July 1997, which triggered a financial crisis. The government encouraged financial institutions to establish institution-specific asset management companies to address nonperforming loans (NPLs), which peaked in 1999 at 47.7% of total loans. Despite those efforts, NPL levels remained high. In 2001, the government created the Thai Asset Management …

Colombia: Central De Inversiones Sa (Cisa), Lily S. Engbith, Manuel Leon Hoyos

Journal of Financial Crises

Colombia began 1999 amidst a deep recession, caused in part by financial and trade sector liberalization and exacerbated by an unexpectedly sudden appreciation of the peso. Nonperforming loans (NPLs) amounted to more than 14% of total loans, up from 8% in 1998. Colombian authorities thus decided to implement a three-year economic recovery program in late 1999. As part of the government’s strategy, banks slated for recapitalization were compelled to transfer or write off their NPL portfolios to Central de Inversiones SA (CISA), a public special purpose vehicle acquired by the deposit guarantee fund Fogafín in September 2000 for the management …

Malaysia: Pengurusan Danaharta Nasional Berhad, Mallory Dreyer

Journal of Financial Crises

After the devaluation of the Thai baht in 1997, the Malaysian economy experienced turmoil and a financial crisis. As part of the government’s response to the financial crisis, it established Danaharta, a national asset management company, alongside a recapitalization agency, Danamodal, and a debt restructuring body, the CDRC, to address instability in the financial system. The government established Danaharta with the purpose of removing nonperforming loans from the financial system and maximizing their recovery. The Danaharta Act granted the agency special legal authority to more efficiently resolve NPLs. Danaharta received funding from the government and issued zero-coupon, government guaranteed bonds …

The Resolution And Collection Corporation Of Japan, Mallory Dreyer

Journal of Financial Crises

Though the Japanese real estate and stock market bubble burst in the early 1990s, the ensuing financial crisis in Japan did not reach a systemic level until 1997, when four large financial institutions failed in a single month. Because of their heavy exposure to real estate and equity markets, Japanese banks had a nonperforming loan (NPL) problem, which was prolonged, and private sector estimates of the scale of the NPL problem differed significantly from the official estimates. In response, the Japanese government created multiple asset management companies; the Resolution and Collection Corporation (RCC) was the result of the merger of …

Indonesia: Ibra’S Asset Management Unit/ Asset Management Of Credits, Ariel Smith, Sharon M. Nunn

Journal of Financial Crises

In 1998, Indonesia’s banking sector was undercapitalized, under regulated, and suffering from an excess of nonperforming loans (NPLs). In response, the Indonesian government devised the Indonesian Bank Restructuring Agency (IBRA) and its Asset Management Unit/Asset Management of Credits (AMU/AMC) as part of a three-pronged government emergency plan, along with a blanket guarantee of the debts of all domestic banks and a framework for corporate restructuring. The AMU/AMC acquired and managed nonperforming loans from a variety of Indonesian banks and attempted to dispose of them. The AMU/AMC had acquired nearly IDR 400 trillion (approximately $86 billion) in face value of loans …

Korea Asset Management Corporation (Kamco): Resolution Of Nonperforming Loans In South Korea, Pascal Ungersboeck, Sharon M. Nunn

Journal of Financial Crises

During the 1997 Asian Financial Crisis, international capital outflows created a liquidity crisis for Korean financial institutions that had relied on foreign short-term borrowing. Korean financial institutions also faced high levels of nonperforming loans (NPLs) following years of rapid credit growth. The government mandated that the Korea Asset Management Corporation (KAMCO) purchase NPLs from banks over a five-year period starting in November 1997. By November 2002, the agency had acquired NPLs with a total face value of KRW 110.2 trillion ($88.2 billion) for KRW 39.8 trillion. Using innovative asset resolution methods, KAMCO was able to recover at a profit a …

Jamaica Financial Sector Adjustment Company (Finsac)—Loan Recovery And Asset Disposal Units, Corey N. Runkel

Journal of Financial Crises

In the late 1980s and early 1990s, the Jamaican financial sector’s share of GDP more than doubled following an aggressive market liberalization undertaken without corresponding increases in regulation or supervision. When one of the largest financial-industrial conglomerates failed in 1995, the government created an asset management company with special powers to resolve the institution. In 1997, after another significant failure, the government established the Financial Sector Adjustment Company (FINSAC). FINSAC carried a broader mandate to both recapitalize and restructure troubled financial institutions and to take over and manage their nonperforming assets (NPAs). The organization possessed no special powers to compel …

Kyrgyz Republic’S Debt Resolution Agency, Debra, Sharon M. Nunn

Journal of Financial Crises

In the mid-1990s, the largest state-owned banks in the Kyrgyz Republic faced insolvency and a concomitant large stock of nonperforming loans, a problem stemming from the former Soviet Union’s policy of directed credit to loss-making institutions. The government established DEBRA, a debt resolution agency and asset management company. DEBRA could liquidate or restructure a bank and take on its assets in the process, or just take on a bank’s nonperforming assets. DEBRA received the assets in exchange for government securities. Staff attempted to resolve the debt by collection, restructuring, writing off, or liquidating the assets. Officials initially established DEBRA with …

Mongolian Asset Recovery Agency, Sean Fulmer

Journal of Financial Crises

Mongolia’s transition away from the monobank system in the 1990s did not occur smoothly, with inherited, non-performing loans from the monobank period causing significant instability and insolvency in the banking sector. These inherited portfolios, in conjunction with risky lending by the newly formed banking sector, led to the insolvency of People’s Bank (also known as Ardyn Bank), and Insurance Bank, which together held approximately 35% of total assets in the banking system. From 1996 to 1997, the Mongolian government, with the technical and financial support of the World Bank and the Asian Development Bank, formed the Mongolian Asset Recovery Agency …

Mexico: Fobaproa Capitalization And Loan Purchase Of Bank Portfolio Program (Clpp), Manuel León Hoyos, Alexander Nye

Journal of Financial Crises

In December 1994, Mexico entered a financial crisis after a year of political turmoil, assassinations of high-level politicians, and a substantial depreciation of the peso. In 1995, following the economic contraction, the recently privatized banking sector experienced difficulties in meeting regulatory minimum capital requirements. The Mexican government received a $52 billion international financial package and enacted multiple programs to support the banking system. In the spring of 1995, through the Bank Fund for Savings Protection (FOBAPROA), the Capitalization and Loan Purchase of Bank Portfolio Program (CLPP) was introduced to provide new, permanent capital to Mexican banks. For banks that were …

Kazakhstan’S Rehabilitation Bank, Sharon M. Nunn

Journal of Financial Crises

After the dissolution of the Soviet Union in 1991, Kazakhstan officials made market-oriented stabilization reforms to its previously Soviet-planned economy, including removing most price constraints, privatizing various state-owned enterprises (SOEs), and taking steps to prevent the collapse of its banking system. As part of its efforts, Kazakhstan created the Rehabilitation Bank (RB) in 1995 to absorb the large number of non-performing assets from state-owned banks while also assuming a corresponding amount of the institutions’ liabilities, essentially “shrinking their portfolios” (Implementation Completion Report 1998). The RB, established with a four-year mandate, either liquidated the debtors or required the firms to restructure. …

Finland: Arsenal, Kaleb B. Nygaard

Journal of Financial Crises

Following a large-scale deregulation of the financial sector during the 1980s and the subsequent massive credit expansion, a banking crisis in Finland caused a sharp contraction in the economy in the early 1990s. One of the key policy responses to the crisis was the creation of an asset management company called Arsenal in 1992. The original purpose of Arsenal was to absorb, manage, and liquidate the bad assets of the Savings Bank of Finland (an entity created by the government-forced merger of 41 of the country’s 81 savings banks). During the following years, Arsenal expanded to become a group of …