Afternoon Links 4-7
$45 fee for carry-on luggage? (Peterson/Seetharaman, Reuters) Airlines gotta make money somehow!
Nearly half of households pay NO federal income tax (Ohlemacher, AP)
Chart — Consumer credit tumbles in February (Culp, Reuters) De-leveraging. Good.
Asset bubbles and implications for monetary policy (Dudley, NY Fed) At least now the Fed will admit bubbles exist. Difficulty in spotting them is no excuse for inaction Dudley offers, helpfully. He still punts on tightening monetary policy as a counterweight, arguing that regulation and supervision are better ways to contain bubbles. One way regulators can do more is substantially raising capital requirements. Meanwhile….
KC Fed’s Hoenig urges rate increases “soon” (CR) He wants to move towards a Fed funds rate of 1%.
Why not an annual bank stress test? (Cox, Reuters Breakingviews) Here’s a case where rinse/repeat would make sense…
Flashback — Did Greenspan add to subprime woes? (Ip, WSJ) I link to this old piece because, among other things, Greenspan today blamed the late Ed Gramlich for the Fed’s failure to get tough on subprime. Greenspan said the Fed didn’t regulate subprime b/c Gramlich — the Fed’s expert on the topic — didn’t bring his concerns to the full board of governors. But as this old interview makes clear, Gramlich swallowed his concerns out of deference to Greenspan, who was clearly opposed. Unfortunate that Greenspan threw him under the bus like that.
Quote of the Day — from Brooksley Born, confronting Greenspan about his refusal to regulate derivatives. Born said this after Greenspan argued CDS would have blown up AIG even if they’d been insurance policies. Paraphrasing:
Had [CDS] been sold as insurance products, they would have been regulated. There would have been a capital reserve requirement. There would have been an insurable interest requirement. There was no such regulation in the OTC derivatives market thanks to the President’s Working Group and Congress.
Booyah. Must have been cathartic. (Take a look at the authors of the PWG report.)
Avatar…and predecessors (imgur) By the time I got to the last three rows I busted up.