Tuesday, November 24, 2009

Carbon trading schemes hold promise for Africa but have potential for abuse


AllAfrica.Com: Africa: Continent in the Global Carbon Trade

AllAfrica.Com: Africa: Continent Told 'Stop Playing the Victim'

The Times: SA Missing the Carbon Bandwagon

African leaders met recently at the Carbon Markets Africa Conference to discuss how to position the continent to take advantage of the Kyoto Protocol's Clean Development Mechanism (CDM). While few people expected the CDM to lead to wide-scale investment and development on the continent, many there are now seeing it as another means for Western corporations to continue polluting while providing public relations “greenwashing.”

The stated purpose of the CDM was to allow industries in one country to make direct investments in the developing world that would reduce their carbon emissions. The theory was that since climate change is a global problem, perhaps international development solutions could be effective. The hope was that these carbon offsets would slash not only current emissions, but would prevent future emissions increases as major industry begins to come online in less developed countries. However, Africa has such a low number of existing industries that it is finding it difficult to market itself for CDM dollars against more aggressive countries such as China, Brazil, or India.

World Bank numbers agree with the claims of African leaders. Of the 140 million carbon credits issued by the United Nations since 2005, only 1.6 million have been for development in Africa. This represents slightly more than 1% of the total, a shockingly low number considering the hype that preceded the program. In comparison, China accounts for 73% of CDM trades.

There is disagreement about solutions. Some believe Africa needs to redouble its efforts and copy existing programs. CDM Executive Board chair Lex de Jonge had sobering words for the leaders: “stop playing the victims here in Africa.” De Jonge told participants at the conference that Africa must pursue a low carbon development strategy different than the west did. Some African business leaders agree, suggesting that it must go after development projects instead of waiting for the United Nations to deliver them.

Others, including many African leaders, claim that changes to the CDM are required. They want to make agricultural and land-use projects eligible for investment. They say that while Africa may have few potential industrial projects, it is brimming with opportunity that takes advantage of its abundant farm land. Nikolaus Schulze, director of project finance for the German company First Climate, says that African countries need to become more business savvy, “The first question has to be: where is the demand for buying the credits (a project earns)?” However, voices for reform and organization are in the minority and the CDM executive board has not been receptive.

One issue that both sides can agree on is that the CDM regulatory paperwork can be onerous. One South African project took over a year to be approved. De Jonge says that attempts are being made to stream-line the process as much as possible, and South African developers say they understand the need to maintain strict rules to provide maximum legitimacy to the program.

While global leaders meet in Copenhagen to delay action on more aggressive mitigation strategies for climate change, there are many who are still trying to implement basic programs from the Kyoto round. Western countries that emit the majority of the world’s carbon can begin to look for viable offset programs, and they can start with some of the lowest hanging fruit—basic economic development in Africa. The next Carbon Forum will be held in Nairobi, Kenya on March 3rd – 5th 2010.


1) Should companies have quotas to invest a certain percent of their CDM trades in Africa?

2) How can companies reach out to African nations to help them develop CDM deals?

Monday, November 23, 2009

Two “Unknowns” Elected to European Union High Posts

Telegraph, Herman van Rompuy and Baroness Ashton: The EU's Perfect Couple of Nobodies
WSJ, Belgian Premier van Rompuy Named First EU President
English Aljazeera, Leaders meet to elect EU president

The European Union (“EU”) elected its first EU President and EU Foreign Policy Chief this week under the new framework of the recently ratified Lisbon Treaty, a set of reforms to the EU’s internal functions that seek to strengthen and centralize Europe. For a discussion of the Lisbon Treaty, see http://uicifd.blogspot.com/2009/10/ireland-votes-yes-for-lisbon-treaty.html. Belgium’s Prime Minister Herman van Rompuy and EU Trade Commissioner Baroness Cathy Ashton will fill the roles of President and Foreign Policy Chief respectively to oversee the EU’s 490 million population.

Despite their political successes, neither van Rompuy nor Ashton is well known in the global community. Herman van Rompuy is an uncontroversial, 63-year-old Belgian centrist who has spent his year as Prime Minister of Belgium relatively unnoticed. Van Rompuy, a mild-mannered economist who spends one day a month in a monastery in silence, never loses his temper and was selected because he is a conciliator who is not associated with controversial, state-dividing issues. He studied economics at the Catholic University of Leuven, worked at Belgium's Central Bank, and became a member of the centre-Right Christian Democrat party. When King Albert II pressured van Rompuy to run as Belgium's Prime Minister, van Rompuy avoided the position as best he could, but eventually accepted only because the country needed leadership and a stronger identity to neutralize the disintegration caused by the long-running feud between Belgium’s French and Dutch speakers. Van Rompuy speaks both languages.

Aston, also relatively unknown, has served as a vice chair of the Campaign for Nuclear Disarmament and vice president for the National Council of One-Parent Families. She held a number of ministerial junior roles in education and the Ministry of Justice before becoming leader of the House of Lords for the Labor Party in 2007. She recently replaced Peter Mandelson’s role as EU Trade Commissioner when he quit in 2008. Her most recent accomplishment was winning the 2009 “Politician of the Year” award from a gay rights group. Like Van Rompuy, Aston was also selected for her ability to develop consensus and relationships, skills the EU valued in this election over the political clout and global recognition that other more controversial candidates provided. Ashton’s gender also played a role, as the detailed template for the two positions, created by the eurocratic elite, sought to empower a gender-balanced and politically unbiased leadership slate. Although Ashton’s Foreign Policy Chief position is technically subordinate to the EU President, her role could have a greater impact. She will have important responsibilities of leading the European foreign policy, overseeing a significant budget for her department, and running the diplomatic corps and staff of 3,000 people, with an annual budget that could top €4 billion ($6 billion).

Both van Rompuy and Ashton were backed unanimously by the 27 members of the European Union, but the global community has divided sentiments about the appointments. Some feel that a stronger, more charismatic and forceful leader would better represent the EU globally. Others support the EU’s choice of leaders who can build consensus and harmony within the EU.

1. Should a political leader be chosen for qualities such as gender and age, or should their qualifications be based on their accomplishments?
2. Is internal consensus within the EU necessary before the EU can be marketed as a global force to the rest of the world? Is this an achievable goal?

Sunday, November 22, 2009

Why China is Hesitating to Revalue Its Currency


Economist: A-yuan-sided argument

Financial Times: Renminbi sparks strong views; Beijing signals send renminbi higher

IMF: The International Monetary System: Reforms to Enhance Stability and Governance

Despite the growing international pressure for a stronger renminbi, China will revalue its currency “only when it sees fit,” not owing to the international pressure, according to the Economist. China allowed the renminbi to rise by almost 20% against the dollar between July 2005 and June 2008. In July 2008, however, it pegged the renminbi again to the dollar in order to protect its exporters during the global financial crisis. Many, including Dominique Strauss-Khan, the managing director of the IMF, have urged China to allow its currency to rise, arguing that a stronger renminbi would reduce global imbalances as well as help rebalance China’s own economy.

There has been speculation about whether China would revalue its currency during President Obama’s first visit to China. Notably, a week before his visit, the People’s Bank of China changed the usual wording of a key currency policy statement. In its quarterly monetary policy report, the central bank did not use a phrase about its intention to keep the renminbi “basically stable,” and added that it would take into account “international capital flows and changes in major currencies.” However, there was no revaluation of the renminbi during Mr. Obama’s visit.

China has its own arguments for delaying revaluation of the renminbi. First, China simply rejects the accusation that fixing the renminbi to the falling dollar gives an unfair trade advantage to its exporters. Second, China emphasizes that it has already done a lot to reduce global imbalances as its monetary and fiscal stimulus boosted domestic consumption. Net exports declined almost about 4 percentage points, and its current-account surplus has almost halved to about 6% of GDP from 11% in 2007. Third, a large one-off revaluation of the renminbi (perhaps 25%) would be politically implausible as it would make its exporters suffer greatly. Lastly, some Chinese economists argue that a stronger renminbi would not significantly help the US reduce its trade deficit. Since there is little overlap between American and Chinese production, American goods would unlikely replace Chinese imports. As a result, American consumers would have to pay more for imports from China or other countries.

These arguments may work for now. However, the arguments for revaluation will be much more persuasive by early next year when China’s exports grow again, its GDP grows up to 10%, and its inflation rate turns positive. The Economist pointed out that China is unlikely to change its exchange policy because of the international push. Rather, China will more likely change it if foreign policymakers would “shut up.”

Discussion Questions:

1. “China is loath to give in to foreign pressure,” says Michael Hart at Citigroup. Do you agree with his statement? If the statement is true, should other countries and multilateral financial institutions stop urging China to revalue its currency? Do you think China would not revalue its currency even when it sees revaluation is in the best interest for China simply because China does not want to give in to foreign pressure?

2. Do you agree with the argument that there is little overlap between American and Chinese products and revaluation of the renminbi would only make American consumers worse off?

State of Ohio Sues Credit-Rating Agencies For Lost Money

Ohio Attorney General Richard Cordray has filed a lawsuit in federal court against the three top credit-rating agencies in the U.S.: Moody’s Investors Service, Standard & Poor’s and Fitch. Cordray announced the suit in a press release Friday, November 20 and alleges that improper actions by the agencies cost state pension and retirement funds $457 million. The suit only adds to the legal woes of the agencies, who have already been sued by a slew of private agencies for similar offenses.

In terms of last year’s financial crisis, credit-rating agencies were responsible for evaluating the mortgages that comprised mortgage-backed securities. That rating was then used as the only indicator of the mortgage’s value, which mortgage was subsequently packaged with others and sold as a security to investors. This process relied heavily on the accuracy of the rating, and as a result, the rating agency’s decision about a loan essentially determined whether or not the loan made it to Wall Street. In the wake of the recent financial crisis, these credit-rating agencies have made the shortlist of potential responsible parties. Credit-rating agencies have been blamed partially because they had a major conflict of interest in handing out good ratings, as they were paid by the banks requesting the ratings.

The suit alleges that the agencies’ pursuit of profit and Wall Street connections resulted in inflated ratings on toxic mortgage debt and that these ratings cost Ohio state pension funds a great deal. Court documents allege that the rating agencies gave false and misleading ratings (sometimes “triple-A” ratings) to securities they knew were risky. “Triple-A” ratings are those which indicate an almost zero risk of default. The suit quotes an S&P analyst’s statement made in 2007 saying that “it could be structured by cows and we would rate it,” presumably referring to the lax rating standards the company chose to use.

Rating agencies have defended themselves against fraud allegations in the past by arguing that their ratings constitute opinion and right to free speech and therefore warrant protected by the First Amendment of the U.S. Constitution. Ohio is the first state to sue the agencies. Jerry Brown, the Attorney General of California has publicly stated that he has considered filing suit against the rating agencies, focusing on whether the agencies violated California law.
As of yet, the credit-rating agencies have been successful in thwarting the cases against them. They have yet to lose a court case against anyone on the issue, winning on the argument that their ratings are simply opinions about the future, and therefore subject to free speech protections similar to those for journalists under the First Amendment. The Ohio lawsuit does have the advantage of coming after the financial crisis, and also argues that even though the statements were opinion, the First Amendment does not extend to intentional manipulation of financial markets.

Discussion Questions:
1) The suit alleges that unless the banks got the ratings that they requested on the loans submitted to the ratings agencies, the agencies would not receive full fees. Do you think the First Amendment claim wins out in that situation or does the conflict of interest and resulting fraud overcome that argument?

2) In hindsight, what could have been done to ensure that inaccurate ratings were not given? Is it the fault of the government for not regulating the agencies’ transactions?

16 Year Banana Wars close to resolution

The Malaysian Insider – Deal nears to end ‘banana wars’

The “banana wars” began in 1993 when Britain began to give preferential treatment to banana producers from former British and French colonies in African, Caribbean, and Pacific regions by imposing tariffs on countries outside of those regions. The dispute is the longest running trade dispute in the world. Honduras, Ecuador, and Costa Rica have all successfully brought trade complaints to the world trade organization over the past sixteen years. American Companies, Chiquita Brands and Dole have also successfully brought trade complaints with the world trade organization over the tariffs.

The current proposal to end the banana wars would phase out the tariff that the EU charges on Latin American bananas over the next seven years. Latin American countries would also agree to drop all litigation in the EU involving the trade dispute. The agreement would provide the countries in Africa, the Caribbean, and Pacific region that currently benefit from the tariff with approximately 190 million Euros in development aid to help them restructure. The agreement further provides that it will not be subject to revision if global Doha round talks succeed. Trade Commissioner, Catherine Ashton, stated that the countries would likely finalize an agreement within the next two weeks. Costa Rican Trade Minister, Marco Vinicio Ruiz, attempted to downplay how far negotiations had progressed, asserting that any agreement would likely take until the end of the year to finalize.

The end of the banana wars potentially signifies a new era of global trade relations. The trade agreement ending the banana wars might spur further negotiations in the currently stalled Doha round of world trade negotiations. The end of the banana wars would likely clear the way for further agreements in dozens of other tropical products and other agricultural products. Disputes over agricultural subsidies between the EU, America and Latin America caused negotiations to break down in 2007 and continue to be a major source of dispute in world trade negotiations. Even if the agreement does not further the agenda of the Doha round, the agreement will likely open the window for the EU and several Latin American countries to pursue multi-country free trade agreements and bilateral trade agreements. Analysts note that an agreement ending the banana wars would likely result in free trade agreements between the EU and Columbia, Peru, and Ecuador.

Will the end of the banana wars lead to more free trade agreements among countries?

Is it surprising that the countries successfully ended the banana wars during 2009, when many countries are enacting protectionist measures?

Monday, November 16, 2009

Recent conflicts in Yemen threaten to disrupt economic development and international investment


Time.com - Yemen-Saudi Skirmishes Threaten a Wider Conflict

Library of Congress, Federal Research Division - Country Profile: Yemen

New York Times Online - In Yemen, War Centers on Authority, Not Terrain

Al Jazeera English - Yemen Conflict Raises Gulf Tensions

Haaretz.com - Common thread

Asharq Alawsat - Don't Confuse the Huthis with the Zaidis

Yemen Post - Businessmen Fear Being Kidnapped; Nine kidnapped in 2009

UPI.com - Arab Experts Predict Middle East Water Wars

Yemen Observer - WFP reaches 100,000 people in Yemen, amidst continued fighting

Yemen Post - Yemeni-Saudi Transport Venture Underway

Yemen News Agency - UK confirms continuing support for development in Yemen

Recent fighting in Yemen risks sparking a wider war that would destabilize the economy.  Despite its proximity to Saudi petrodollars, Yemen’s development has lagged far behind its northern neighbor.  The complex background of this conflict has its roots in early Islamic history, modern power politics, and diminishing natural resources.  These complicated issues make finding a lasting peace elusive.  Until then, rebel forces are slowly taking their toll on the Yemeni economy through lost investment opportunities and scuttled development projects.  Analysts project that foreign assistance will make up for current budget shortfalls but recognize that this is only a short term, unsustainable fix.  For Yemen to stand on its own, investment must improve in a peaceful atmosphere.

Since North and South Yemen unified in 1990, their economies have been dealt a series of blows.  In 1991 Yemen supported Iraq.  In retaliation, Saudi Arabia deported almost 1 million workers from Yemen and along with Kuwait, slashed economic aid.  In 1994 a civil war further crippled the weak economy.  More recently, the International Monetary Fund has threatened to reduce its aid to Yemen pending economic reforms.  At the same time, the cultivation and use of the obscure drug khat has been taking over fertile fields and a disproportionate amount of their dwindling water resources. 

The main area of conflict centers on desert tribes that operate in the north area of Yemen near the Saudi Arabian boarder.  This group, called the Houthi, is a radical group from the Zaidi sect of Shi’ite Islam.  Saudi Arabia and the leaders of Yemen are Sunni.  Many citizens in Yemen suspect covert Shi’ite Iranian involvement.  Saudi Arabia and Islamic experts have gone to great pains to stress that the conflict cannot be simply described as religious in nature.  Some political experts believe the fighting is an effort for current president Ali Abdullah Saleh to maintain his political power.  Other economists believe the root of the conflict is drastic water shortages that inflame tribal tensions.  Regardless of its cause, violence has been building.  In early November small scale skirmishes intensified when a Saudi officer was killed and Saudi Arabia responded by using fighter jets to bomb rebel strongholds. 

The rebel pressure from the north is concerning not only because of the thousands that have died and tens of thousands of new refugees.  It also risks allowing Al-Qaeda forces in the south of the country to gain power.  A recent report from the risk consultant Eurasia Group reported that Al-Qaeda is establishing “more sophisticated infrastructure” in Yemen.  Many experts agree that Al-Qaeda is regrouping and gaining power to launch attacks throughout the region from its Yemeni base.  Recently, Anwar al-Awlaki, a radical imam suspected of Al-Qaeda involvement and whose teachings may have influenced the tragic killings at Ft. Hood, Texas was suspected of hiding in Yemen.

These destabilizing forces have made international investment a risky proposition.  The Yemeni President Ali Abdullah Saleh described the aim of the rebellion as “trying to demolish the economy.”  When energy giant Total built a new facility in the country that could bring in more than $1 billion annually to government coffers, it did so with extreme security.  Security during construction was high, and it has now hired 500 soldiers to guard the facility.  This high security is important, because there were at least 9 recorded kidnappings of businessmen in 2009.  One worker described the hushed tones in his office because, “We try not to yank the door handles so that our manager does not get horrified by the sound”.  The Yemeni government is trying to attract investors, hosting a conference November 11th and 12th titled “Aden…Yemen’s Gate to the World.”  It is hoping that by addressing security issues head on, it can bring in more direct investment.  Yemen has also stepped up appeals to foreign governments, recently securing commitments of support from the United Kingdom.  Meanwhile, all eyes are on the widening gyre and development aid has shifted from economic assistance to supporting human needs.  The United Nations World Food Program is now feeding 100,000 people in Yemen.


1) Is it possible for Western countries to be involved in this conflict without further straining the relationship between the West and Islam?

2) How can foreign aid agencies that are seen as allied with the West be effective in this conflict? Should they continue to operate if their workers are targeted?

Sunday, November 15, 2009

Columbian Venezuelan Dispute Threatens Regional Stability

Financial Times – Locals suffer in spat over US-Columbia pact

Financial Times – Columbia appeals to UN over Chavez threat

The Wall Street Journal – Obama is Optimistic About U.S., Columbia Free Trade Deal

El Universal – Samper rebuts Columbia’s decision to turn to UN, OAS after Chavez “war talk”

The crisis between Venezuela and Columbia continues to intensify. Early this month, a Columbian football team was killed by Marxist guerillas in Venezuela. Shortly after that attack, Venezuela accused Columbian paramilitary forces of killing two Venezuelan national guards. On November 5th, Venezuelan President Hugo Chavez moved 15,000 troops to the Columbian border. On November 8th, Mr. Chavez informed his military commanders to prepare for war. Mr. Chavez’s order appears to be related to an agreement signed between Columbia and the United States in August 2009 that permits the United States to use seven Columbian bases. Mr. Chavez thinks that the increased military presence of the United States in the region represents a threat to Venezuela’s large oil reserves.

Columbia’s agreement to permit the United States on seven of its military bases appears to be another step towards convincing the United States to approve a bilateral trade agreement between the two countries. Columbia and the United States have discussed opening a bilateral trade agreement since 2006. This summer, President Barack Obama met with Columbian President Alaro Uribe and discussed strategies for strengthening the relationship between the countries. The bilateral trade agreement has stalled in the United States Congress, as Congressional Democrats, pressured by labor leaders, have held the free trade agreement up.

In 2008, Columbia and Venezuela entered into a bilateral trade agreement. As bordering territories, Venezuelan citizens depend on Columbian imports for staple supplies such as chickens and milk, and Columbian businesses depend on the Venezuelan export market. Last year, Columbian business exported nearly $6 billion of products to Venezuela. Trade between the two nations grew to over $7 billion during 2008. In August, Mr. Chavez stated his desire to reduce trade between the two nations “to zero.” This year, bilateral trade is expected to fall more than 50%. Columbia has petitioned the WTO to intervene in the trade dispute. Former Columbian President Ernesto Samper expressed doubts that the WTO will solve the crisis, and has suggested that a resolution will only come about through diplomatic discussions between the two countries. Citizens of both countries in the border region would benefit greatly from a quick resolution to this conflict.

Discussion Questions:

Will Columbia opening military bases to the United States cause the United States to enter into a bilateral trade agreement with it?

Did Columbian leadership make the right decision by permitting the United States to use its military basis?

India’s Job Guarantee Scheme Lauded as a Timely Fiscal Stimulus

Economist: Faring well; An imperfect storm
Center for Market and Public Organization: Job Guarantee: Evidence and Design

India’s job guarantee scheme under National Rural Employment Guarantee Act of (NREGA) promises 100 days of minimum-wage employment on public works per year to every rural household that asks for it. The NREGA was introduced in 2005 in an effort to improve the purchasing power of the rural people. Although this scheme was once regarded as a “reckless fiscal sop,” now economists argue that India was able to weather the recent global financial crisis due in part to strong rural demand supported by its job guarantee scheme.

The idea gained appeal even in development countries. For example, Paul Gregg of Bristol University and Richard Layard of the London School of Economics have called for a job guarantee program in Britain that provides jobs to anyone out of work for more than 18 months and to young people out of work for one year.

However, there exist some downsides to the scheme with respect to how it is administered in India. As bankers who distribute the payment are reluctant or very slow to do the required paperwork, getting the payments is “grueling labor” in itself. Some bankers are even worse. In Jharkhand, a banker conspired with government officials to fake the number of days worked under the scheme, and took the extra money from workers’ bank accounts. Also, the government often sets the minimum wage higher than the market rate. As people prefer to work for high-paying jobs provided by the government, some factories face labor shortage. In Rajasthan, for instance, a cigarette-making factory had to open only at night when they could find more available workers.

For the foregoing reasons, some argue that handing out cash would be a better solution. It would be easy to administer, and the poor can earn money by working for private employers. However, the poor do not seem to prefer receiving free cash. A farmer in a rural village says, “If money comes for free, it will never stay with us.”

Discussion Questions:
1. In developed countries, workfare is designed to stop people living off the state and to help them find gainful employment by providing training and work experience. Meanwhile, India’s scheme only provides unskilled manual work opportunities. Should the program also provide training programs to improve the recipient’s job prospect?
2. How can India improve its job guarantee program?

Friday, November 13, 2009

Restrictions on Bank Revenue Streams Come From Fed This Week

Sources: Ft.com: Fed Bans Unauthorized Overdraft Charges; WSJ.com: Fed Slaps Curbs On Overdraft Fees; Reuters.com: Fed Bars ATM Card Overdraft Fees Absent Opt-in.

Thursday, November 12, The U.S. Federal Reserve announced the imposition of a new Fed policy that will ban overdraft fees on ATM and debit card transactions unless bank patrons “opt-in” to a consumer protection service. Under this policy, if an account lacked sufficient funds and the customer had not approved an overdraft plan, the withdrawal would simply be rejected rather than going through and resulting in large bank-imposed fines. The new rule does not apply to overdrawn checks or recurring debit card transactions such as online bill pay as Fed officials distinguished between “discretionary purchases” and payments consumers clearly want to go through, regardless of a fee. This policy comes at the heels of a decision made by banks earlier this year to self-impose limitations on overdraft fees for fear that government regulation would otherwise come. With Thursday’s announcement it becomes clear that the banks’ self-restriction nevertheless provoked further restriction from the Fed, and might be closely followed by the passage of new laws.

Financial analysts suggest that in these hard economic times, banks have become increasingly reliant on overdraft fees for extra revenue. Fed officials said that banks bring in between $25 and $38 billion in overdraft fines per year, and overdraft charges on a single purchase can be $30 or more. As a result of the new limitations, Bank of America is estimating a loss in revenue for the fourth quarter that falls somewhere in the range of $150-200 million. Economists say that in the wake of losses like this, banks will for new sources of revenue. Some banks have already made changes like raising interest rates on bank-issued credit cards, raising minimum checking account levels, and imposing annual fees for credit card use.

Bank regulators have been under pressure to impose new consumer protection regulations in the aftermath of the financial crisis, as reckless lending practices were a cause of the financial collapse. The fact that the Fed and other regulators failed to reign in those lending practices has brought about the suggestion that power of bank oversight and regulation be transferred to a Consumer Protection Agency. Among supporters of the demotion of the Fed are Senate Banking Committee Chairman Chris Dodd. In response to news about the Fed’s announcement, Dodd made a statement calling the Fed’s new policy “long overdue.” Dodd suggested that not only should consumers have the choice as to whether they want overdraft protection, but overdraft protection plans themselves should changed so as not to contain such things as excessive or double fees, processing manipulation and insufficient notification standards.

The Fed’s new regulation goes into effect July 1, 2010.

Discussion Questions:

1) Dodd called the Fed’s regulation of banks before and during the financial crisis an “abysmal failure.” Is the Fed’s lack of regulation leading up to the financial crisis a symptom of the Bush Administration’s policy on federal oversight or a fault of the Fed itself?

2) What are the benefits of having a Consumer Protection Agency in control of bank regulation rather than the Federal Reserve? Can you envision the role of the Fed after its regulatory power had been stripped?

3) Is the interest in having overdraft protection outweighed by the potential for high fees? Do you agree that there is a distinction between “discretionary purchases” and other purchases? Should customers be required to opt-in to all overdraft protections?