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Automatic Recapitalization Alternatives

Author

Listed:
  • Robert N. Collender

    (Federal Housing Finance Agency)

  • Forrest W. Pafenberg

    (Federal Housing Finance Agency)

  • Robert S. Seiler, Jr.

    (Federal Housing Finance Agency)

Abstract

Regulators are seeking ways to reduce the procyclical effect of the current capital regulatory regime and the spillovers associated with financial firm distress. This paper examines one set of proposed solutions: ex post mechanisms that would automatically recapitalize systemically important financial institutions during periods of distress. Such mechanisms include contingent capital notes (CCNs) and capital insurance.

Suggested Citation

  • Robert N. Collender & Forrest W. Pafenberg & Robert S. Seiler, Jr., 2010. "Automatic Recapitalization Alternatives," FHFA Staff Working Papers 10-02, Federal Housing Finance Agency.
    • Handle: RePEc:hfa:wpaper:10-02
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    References listed on IDEAS

    as
    1. Wall, Larry D., 2009. "Prudential Discipline for Financial Firms: Micro, Macro, and Market Structures," ADBI Working Papers 176, Asian Development Bank Institute.
    2. Claudio Borio & Craig Furfine & Philip Lowe, 2001. "Procyclicality of the financial system and financial stability: issues and policy options," BIS Papers chapters, in: Bank for International Settlements (ed.), Marrying the macro- and micro-prudential dimensions of financial stability, volume 1, pages 1-57, Bank for International Settlements.
    3. Shin, Hyun Song, 2008. "Risk and liquidity in a system context," Journal of Financial Intermediation, Elsevier, vol. 17(3), pages 315-329, July.
    4. Danielsson, Jon & Shin, Hyun Song & Zigrand, Jean-Pierre, 2004. "The impact of risk regulation on price dynamics," Journal of Banking & Finance, Elsevier, vol. 28(5), pages 1069-1087, May.
    5. Froot, Kenneth A., 2001. "The market for catastrophe risk: a clinical examination," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 529-571, May.
    6. Bernd Hofmann, 2005. "Procyclicality: The Macroeconomic Impact of Risk-Based Capital Requirements," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 19(2), pages 179-200, August.
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    Citations

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    Cited by:

    1. von Furstenberg, George M., 2011. "Contingent capital to strengthen the private safety net for financial institutions: Cocos to the rescue?," Discussion Paper Series 2: Banking and Financial Studies 2011,01, Deutsche Bundesbank.
    2. Bofinger, Peter & Franz, Wolfgang & Schmidt, Christoph M. & Weder di Mauro, Beatrice & Wiegard, Wolfgang, 2010. "Chancen für einen stabilen Aufschwung. Jahresgutachten 2010/11 [Chances for a stable upturn. Annual Report 2010/11]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201011.
    3. Bernd Rudolph, 2013. "Contingent Convertibles (CoCo-Bonds) als Bail-in-Instrumente für Banken," Schmalenbach Journal of Business Research, Springer, vol. 65(67), pages 97-122, January.

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