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2 posts on "unintended consequences"
May 23, 2022

The Adverse Effect of “Mandatory” Flood Insurance on Access to Credit

Kristian Blickle, Katherine Engelman, Theo Linnemann, and João A.C. Santos

The National Flood Insurance Program (NFIP) was designed to reduce household and lender flood-risk exposure and “encourage lending.” In this post, which is based on our related study, we show that in certain situations the program actually limits access to credit, particularly for low-income borrowers—an unintended consequence of this well-intentioned program.

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Posted at 7:00 am in Banks, Climate Change, Household Finance, Inequality | Permalink | Comments (2)
October 3, 2016

Fear of $10 Billion

Donald P. Morgan and Bryan Yang

Ten billion has become a big number in banking since the Dodd-Frank Act of 2010. When banks’ assets exceed that threshold, they face considerably heightened supervision and regulation, including exams by the Consumer Financial Protection Bureau, caps on interchange fees, and annual stress tests. There are plenty of anecdotes about banks avoiding the $10 billion threshold or waiting to cross with a big merger, but we’ve seen no systematic evidence of this avoidance behavior. We provide some supporting evidence below and then discuss the implications for size-based bank regulation—where compliance costs ratchet up with size—more generally.

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Posted at 7:00 am in Financial Institutions | Permalink

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Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

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