Sen. Christopher Dodd's, D-Conn., bill on financial regulatory reform embraces a supposed solution to the "too big to fail" conundrum: contingent convertible bonds, or CoCos, which turn into equity once a bank's capital falls below a certain level. Read a good take on CoCos here (and click on the link therein to read Gillian Tett's discussion in the Financial Times, which might require registration). Is this a better approach than simple, transparent capital requirements for big banks? What advantages or disadvantages haven't been mentioned?
-- John Maggs, NationalJournal.com
Is the Obama administration's stimulus plan helping to create or "save" 650,000 jobs, as the president and his aides say? Is that an appropriate way to measure the stimulus' impact? Should Congress consider a new stimulus to create jobs and spur economic activity?
-- John Maggs, NationalJournal.com
8 responses: Gary Burtless, John S. Irons, James Sherk, Desmond Lachman, J.D. Foster, Jeffrey Frankel, Charles Calomiris, Brian Riedl
The New York Times reports that a group of 10 senators (none of them Republican) has called for creation of a bipartisan commission on the budget, akin to the Base Realignment and Closure Commission, that would come up with a long-term plan to reduce budget deficits, including a solution to the impending funding shortfalls for Medicare and Social Security. House Speaker Nancy Pelosi, D-Calif., is opposed, and no prominent Republicans have endorsed the idea. Is there any hope for this idea, could it work, and what other approach might be more effective? Without a credible plan to reduce deficits, how soon would it affect economic growth?
-- John Maggs, NationalJournal.com
4 responses: James K. Galbraith, James R. Horney, Isabel Sawhill, Charles Calomiris
