raised a number of important questions about the ways in which enforcement decisions are made. However, her report lacked any discussion about how enforcement decisions are made against government officials who are involved in wrongdoing – a question that is at least as important as how such decisions are made regarding private parties. The SEC decision to settle charges against fourteen municipal underwriting firms for misstatements and omissions in municipal bond…

It is well intentioned, but inappropriate, to expect broker-dealers to withhold assets to which customers are entitled in the absence of a federal grant of immunity for such actions (or of coordinated federal and state actions). In the absence of such immunity, broker-dealers bear the risk that their actions may result in serious injury to the person whose assets are withheld. What if the senior is unable to close on a house or other significant contract, or fails to make an…

Leaving aside the issue of whether the liquidity requirements are set at the right levels, the question is whether this is good public policy or a subsidization of lending to governmental entities that bypasses the private sector. Notably, Representative Maloney describes banking regulators as "senseless" when they take any action that may burden governmental entities. Apparently, when they impose burdens on the private sector, they become Solomonic.

Professor Pirrong's analysis provokes important policy questions. Does the ability of the CCPs to demand more margin without being subject to contractual limits create a liquidity crisis (or exacerbate a downward spiral during a time of market volatility) when clearing firms and customers sell off positions to meet CCPs' margin demands? The risk that CCPs may damage other market participants is at least as great as that of a direct CCP failure. This does not seem to be a risk…