Comments On ‘The Minneapolis Plan to End Too Big to Fail’

9 Pages Posted: 1 Feb 2017

Date Written: January 16, 2017

Abstract

The Minneapolis Plan by the Federal Reserve Bank of Minneapolis is an important policy proposal to increase capital requirements for too-big-to-fail banks and to impose taxes on large shadow banks. The objective of the plan is to end the too-big-to-fail problem and to reduce the need for government bailouts. The authors of the plan use cost benefit analysis framework to derive optimal levels of regulation. In this comment, I discuss the shortfalls of the cost-benefit analysis that serves the foundation for the proposed 23.5% capital requirements. I refer both to the existing research on the topic and provide suggestions for improvements.

Suggested Citation

Gofman, Michael, Comments On ‘The Minneapolis Plan to End Too Big to Fail’ (January 16, 2017). Available at SSRN: https://ssrn.com/abstract=2908269 or http://dx.doi.org/10.2139/ssrn.2908269

Michael Gofman (Contact Author)

Simon School of Business ( email )

Rochester, NY 14627
United States

HOME PAGE: http://gofman.info

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