Will this proposed rule motivate banking organizations to maintain appropriate liquidity, as defined by the rule? (Does the rule define liquidity appropriately, or at least correctly from a relative (if not absolute) perspective, in a way that verifies that more liquid firms do better than less liquid firms?) Most significantly, does the rule precipitate a bank run if a bank shows somewhat decreased liquidity? Although the idea that transparency is good is the common wisdom,…

This release is over 500 pages, including all of the questions and discussions. Regarding the rule's fairly substantial requirements, CFTC Chair Massad said (at p. 501) that for "a firm that already uses risk management strategies, has various protections against malfunctions in place, and retains the services of talented attorneys, this new regulation will not create significant new burdens for that firm." Does anyone believe that a 500-page release will not…

Notably, the firm was not charged with any violation of Section 10 of the Exchange Act. It was charged only with failing to have appropriate procedures for handling material nonpublic information ("MNPI"). Additionally, the SEC's order against the firm suggested that any use of MNPI, however acquired, is improper. But this is not the law. It is only improper to use MNPI if one comes by the information in a situation in which one has a duty not to use it, or has acquired it improperly. Here,…

From time to time, banks and their employees violate the law and are punished for it appropriately. In that respect, banks are no different from companies in other industries or the government itself. The government's job is to (i) make good laws and (ii) go after those institutions and individuals that break those laws.

The notion that the government is able or should attempt to be an arbiter of "culture" seems dubious. Despite that vagary, the New York Fed . Illustrating the…