Subject: Conservative solutions for the middle class (AEI Economics Ledger) If you have trouble reading this message, click here to view it as a web page.

Conservative solutions for the middle class

VIDEO SERIES — Conservative policy solutions for the middle class

AEI EVENT VIDEO — The new conservative policy thinking

NEW BOOK — “Room to Grow,” featuring contributions from AEI’s James Capretta, Frederick Hess, Andrew Kelly, Michael Strain, James Pethokoukis, Bradford Wilcox, and Ramesh Ponnuru

The expanding regulatory umbrella

The Fed's blueprint for financial control. Paul Kupiec: “Federal Reserve regulation of U.S. capital markets would be a huge mistake. It would retard economic growth, lower investor returns and dull the vibrancy of the country's financial system. The only way to prevent this from happening is new legislation by Congress that would restrict the FSOC's authority to designate financial institutions as systemically important.”

TESTIMONY — Designation of systemically important financial institutions. Peter Wallison: “Although some observers of the financial markets favor more regulation than others, it is not in dispute that financial regulation can have a significant effect on the performance of financial institutions, and thus on economic growth. For this reason, Congress should have a major role in formulating the policies that underlie the regulatory decisions that affect the US financial industry.”

TESTIMONY — Why mutual funds are not systemically important. Paul Atkins: “One simply cannot assume that an enhanced supervisory structure designed to stabilize very large banks is equally well suited to other financial entities with radically different structures and risk profiles. Indeed, given the considerable differences in how such institutions and funds are structured and operate, one should expect that applying the same regulatory standards would yield at least some unexpected and perhaps quite undesirable outcomes.”

NEW PAPER — Holding financial regulators accountable. Abby McCloskey and Hester Peirce: “New rules and increased regulatory intervention will affect consumers, investors, competitive prospects for financial institutions, and the economy. However, regulators generally are not required to consider or disclose the economic impact of the rules they promulgate. We propose a statutory requirement for economic analysis at federal financial regulators.”

Want more accountability for Wall Street? Start with their regulators. Hester Peirce and Abby McCloskey: “The same Main Street individuals and companies who paid dearly for the financial crisis could be forced to pay up again, this time for the costs of unbridled regulation.”

Evaluating the bank tax. Shadow Financial Regulatory Committee: “To the extent that the proposed tax in either the Obama or Camp proposal would tend to incentivize institutions to reduce their size, there might be some marginal but uncertain impacts on systemic risk. But the tax proposals are not risk-related and may create incentives for institutions to take on more risk to generate additional revenue to offset the cost of the tax. Thus, moral hazard would not be reduced and more likely would be enhanced.”

Cyber threats and regulation Responding to Chinese commercial espionage. Derek Scissors: “China has stolen hundreds of billions of dollars’ worth of information, some would say trillions, and has suffered no consequences. No government or firm will depart from such a lucrative path without facing serious costs. Stern words by the US do not constitute serious costs. Neither do threats of arrest which are never going to be fulfilled.”

Why net neutrality is a bad idea. Richard Bennett: “The business practices of network industries need the same sort of anti-trust scrutiny that every industry faces, but they do not need precautionary prescriptions that throw the baby out with the bath water.”

Monetary matters Negative interest rates hit the big time. Alex Pollock: “The European Central Bank is discussing whether it should for first time set negative interest rates for banks’ deposits with it, and may well do so at its meeting on June 5. The press is discussing the ECB’s discussions. This is a highly interesting development financially, but also intellectually.” No, the dollar’s days are not numbered. Desmond Lachman: “A close examination of the world’s other major currencies reveals that a currency is yet to emerge that offers the liquidity, depth of financial markets, and store of value that the U.S. dollar does.”

Another euro crisis? Desmond Lachman: “Judging by the increasingly upbeat statements of European policymakers and the currently buoyant market pricing of eurozone sovereign bonds, one could be forgiven for thinking that the euro crisis is now finally behind us. However, to do so would be to ignore a whole slew of underlying economic and political indicators.”

VIDEO — Kevin Hassett discusses what to make of the FOMC meeting this week

In other news

NEW PAPER — House and land prices in Washington, DC. Edward Pinto, Stephen Oliner, and Morris Davis: “We use a new property-level dataset to estimate the price of land since 2000 for nearly 600,000 detached single-family homes in the Washington, DC metro area. The data show that land prices were more volatile than house prices everywhere, but especially so in the areas where land was inexpensive in 2000.”

California's new solar plant: Burning up taxpayer money, land, and wildlife. Benjamin Zycher: “While the federal government receives net payments for electricity-related oil and gas production on federal land, the net subsidy for the new Ivanpah solar plant is almost 300 times greater.”

Mark your calendar 5.26 Memorial Day; markets closed 5.27 AEI event: Economic liberty and human flourishing: Perspectives from political philosophy 5.29 Jobless claims released 5.29 Preliminary GDP numbers for Q1 2014 released

5.29 AEI event: The future of conservative education policy: Remarks from Representative Todd Rokita 5.30 AEI event: Trading up: Representative Charles Boustany Jr. on free trade’s growth opportunities Keep up with AEIecon Get up-to-the-minute updates on Twitter @AEIecon. Read more from the American Enterprise Institute economic policy team at www.aei.org/economics. Contact Abby at abby.mccloskey@aei.org if you have questions for the economics team. Sign up for a weekly copy of the LEDGER here. If you were forwarded this message, click here to subscribe to AEI newsletters. Click here to unsubscribe or manage your subscriptions. American Enterprise Institute for Public Policy Research | 1150 Seventeenth Street, NW, Washington, DC 20036 | 202.862.5800 | www.aei.org