Alex J. Pollock

Alex J. Pollock is a resident fellow at the American Enterprise Institute.

Ten Thoughts on the Causes of the Bubble and Bust


1. “When it comes to the home mortgage boom and bust, who was to blame? The borrowers? The lenders? The government? The financial markets? The answer is yes. All were responsible.” (Thomas Sowell, The Housing Boom and Bust, 2009.) This seems fair. 2. Not explanatory of the problems are “greed” and “no regulation.” Greed is […]

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Was There Ever a Default on U.S. Treasury Debt?


As the bailouts in the current bust inexorably mount, financed in rapidly increasing U.S. government debt, one might wonder whether a default on Treasury debt is imaginable. In the course of history, did the U.S. ever default on its debt? Well, yes: The United States quite clearly and overtly defaulted on its debt as an […]

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Improving the Financial System for the Next Cycle


Asset bubbles inflate because enough people believe that the good times of expanding credit and rising asset prices will last forever, but of course they don’t. In the midst of the bust that follows, it seems that the bad times of defaults, scarce credit and falling prices will last forever, but of course they won’t. […]

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No Fair


Many of us argued against Financial Accounting Standard (FAS) 133, a big step on the downhill path of “fair value” accounting ten years ago, finding it not only wildly convoluted and expensive, but conceptually wrong. The more criticism the Financial Accounting Standards Board (FASB) got, the more they dug in. At the time, this led […]

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The Greenspan Gamble


The most notable thing about Treasury Secretary Hank Paulson’s proposed plan for restructuring financial regulation is the expansion of the Federal Reserve into a sort of “Super Fed.” This new Fed would have oversight of all financial markets and firms, including investment banks. It would be responsible for financial market stability and would be expected […]

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Protecting Our Last International Advantage


With the 2006 elections, we have a federal government divided on partisan lines between the legislative and executive branches. But enhancing the international competitiveness of the American economy and capital markets needs to be a priority for both parties. Just as the Sarbanes-Oxley Act was a bipartisan political overreaction to the scandals of its day, […]

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Undisclosed Interests


WASHINGTON — With today’s intense network of communication, the Securities and Exchange Commission cannot regulate the capital markets from an Olympian height. It is itself immersed in the markets: its own investigations are market-moving events. This effect has been magnified in the environment of the post-Enron or Sarbanes-Oxley era. Unavoidably, some market actors draw this […]

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Time to Reform Sarbanes-Oxley


To address reform of the Sarbanes-Oxley Act of 2002 (Sarb-Ox), recall that it was passed in the political furor following the Enron and WorldCom scandals to try to prevent future accounting frauds. Let’s start with its most obvious, largely unintended, consequences. Sarb-Ox, with its notorious Section 404 requiring internal control certifications in particular, has created […]

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