Subject: Wall Street regulation; womens economic opportunity; put Ex-Im out of its misery (AEI

Economics Ledger)

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The president turns to Wall Street regulation

The narrative of the financial crisis i s wrong. Peter Wallison: The narrative that came out of the
financial crisis was that it could have been prevented by better regulation. . . . This is essentially the
conclusion of the Financial Crisis Inquiry Commission (from which I dissented) and it is the basis for the
reforms implemented by the Dodd-Frank Act in 2010. It is also a fantasy.

Reform the housing gi ants before its too late. Alex Pollock: Can the Fannie and Freddie situation be
addressed before they arise from their near-death as dominating and pernicious as before? Yes, it can
be. The imperative is to eliminate to the maximum extent the special legal and regulatory favors for
Fannie and Freddie, so that even though they are still operating, they would cease to function as GSEs.

The Financial Stabi lity Oversight Counci l lacks credibility. Peter Wallison: This agency has the
extraordinary power to designate financial firms as systemically important financial institutions, or SIFIs,
and there is very little evidence available anywhere that it has the ability or desire to use that power other
than arbitrarily. Indeed, all the evidence is to the contrary.

No new housing bubble (at least for now). Alex Pollock: Now is definitely not the time for the Fed or
politicians to promote further rapid house price inflation. A new housing bubble in the future is certainly
possible, but the every-10-years crisis may arise from something entirely different something now
unthought of.
The five laws of housing finance. Alex Pollock: The most basic goal for every housing finance system
is enabling long-term property ownership. The most basic question is how the inherent risks of doing this
are distributed among the various parties and how they are moved around. Once a house has been
financed by debt, the risks are always there they do not go away. But who is bearing which risks?
Increasing economic opportunity

NEW PAPER How to improve economic opportunity for women. Aparna Mathur and Abby
McCloskey: American women have made significant progress in the labor market over the last several
decades, but many working women are still struggling with challenges related to child care, single
motherhood, low-paying and low-promotion jobs, and an unfair tax code. In particular, high child care
costs cause women to leave the workforce or take lower-paying jobs with less-demanding hours. Reforms
to existing child care credits would increase professional opportunities, especially for low-income women.
MORE Washington's regulations and taxes keep working women down

Innovation drives growth and, yes, helps people. Stan Veuger: As Nobel laureate Robert Solow
demonstrated in the 1950s, the ultimate source of sustainable economic growth is innovation, that is, the
development of new technology, of new organizational forms, and of better modes of governance. At the
same time, disruptive new ways of producing and consuming goods and services have always
encountered opposition.
Changing the Feds focus
NEW PAPER Worry about growth, not inflation. J ohn Makin: The US Department of Commerce's
third estimate of first-quarter GDP growth, -2.9 percent, does not bode well for US economic growth in
2014. The Federal Reserve has done well to ignore inflation alarmists' calls to increase interest rates
following May's modest increase in consumer price index inflation growth. Nonetheless, the Fed needs to
stop talking about when it will start raising interest rates and instead focus on actions it might take to
boost a weak US economy.
Reality check for the Fed from across the pond. Desmond Lachman: Perhaps the most valuable
criticism that the BIS levels at U.S. monetary policy making is that the Fed's policy timeframe remains too
short and that the Fed continues to pay too little attention to asset and credit market inflation. This leads
the Fed to have a two-year policy framework focusing too much on the shorter-lived economic cycle and
too little on the longer-lived financial market cycle.
Fed policy cant save Greece. Desmond Lachman: Especially at a time when the Federal Reserve has
already started tapering its bond buying program, Greek policymakers would be making a grave mistake
to premise their policies on the assumption that today's highly favorable global liquidity conditions will
persist indefinitely. Rather, they should now be preparing for a return to more normal liquidity conditions
by redoubling their efforts at structural economic reform to make the Greek economy very much more
competitive.
In other news
ICYMI Obama lunches with economists, including AEIs Kevin Hassett
Put Ex-Im out of its misery. Michael Strain: Ex-Im is the very definition of corporate welfare it helps
foreign buyers to purchase U.S. goods by offering favorable financing for those deals. In 2012, a
staggering 82.7 percent of its loan guarantees went to Boeing, as my AEI colleague Timothy P.
Carney reported. The government shouldn't take money out of your paycheck to assist Boeing's
customers.
MORE Export-Import Bank is a petri dish of corruption and graft
OPPOSING VIEW Don't kill the Ex-Im Bank

Ann Coulter just might be a closet soccer fan. Stan Veuger: Ann Coulter is, at her best, a provocative
and entertaining performance artist. Unfortunately, there are times when her poststructuralist reasoning
falls short of insightful analysis. An excellent example of such a time comes from last week, when she
dedicated a column to soccer.
Rubios ideas start to offer the GOP a chal lenge and an opportunity. J im Pethokoukis: Rubio might
run for president. But even if he does not, he is methodically assembling a bold, smart agenda for any
reform-minded national candidate wishing to move forward both America and the Republican Party.
Mark your calendar

7.4 Happy Independence Day! (markets closed)
7.9 Federal Open Market Committee minutes
7.20 Weekly jobless claims
7.15 AEI EVENT: Can committees create financial stability?
7.22 AEI EVENT: Who governs the Internet? A conversation on securing the multistakeholder process
7.24 AEI EVENT: Is it time to end the Export-Import Bank?

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