Bailouts, monitoring, and penalties: an integrated framework of government policies to manage the too-big-to-fail problem

This paper discusses optimal government bailout policy where the costs of systemic failures and moral hazard problems are considered. We find that a three-tiered bailout policy that includes an ex post monitoring and bailout scheme for financial institutions with large systemic impacts ('too big to fail') is optimal. The optimal policy also requires a randomized bailout for medium-impact institutions ('Constructive Ambiguity'), and no bailout for institutions that have only minimal systemic consequences ('too small to save'). However, in a volatile, innovative market environment where individual institutions may know more than the government regulator, monitoring error could contribute to risk taking, leaving the government regulator to always play a 'catch-up' role in revising policy. Moreover, the optimal bailout policy may not be time-consistent: institutions not deemed 'too big to fail' may still have an incentive to take excessive risks and expect to be bailed out in case of insolvency, primarily due to the short-term orientation of the government. Finally, because an institution's systemic cost affects the probability of a bailout, we show that the boundary of an institution may be extended by the government subsidy.

Too difficult to manage, too big to ignore: party choice in multiparty presidential systems

In consensual (proportional) highly fragmented multiparty settings, political parties have two historical choices to make or pathways to follow: i) playing a majoritarian role by offering credible candidates to the head of the executive; or ii) playing the median legislator game. Each of those choices will have important consequences not only for the party system but also for the government. The purpose of this paper is to investigate the role played by median legislator parties on coalition management strategies of presidents in a comparative perspective. We analyze in depth the Brazilian case where the Partido do Movimento Democrático Brasileiro (PMDB) has basically functioned as the median legislator party in Congress by avoiding the approval of extreme policies, both on the left and on the right. Based on an expert survey in Latin America, we built an index of Pmdbismo and identified that there is a positive correlation between partisan fragmentation and median legislator parties. In addition, we investigate the effect of having a median legislator party in the governing coalition. We found that it is cheaper and less difficult for the government to manage the coalition having the median legislative party on board.

Too Big to Ignore: Global Partnership on Small-Scale Fisheries Research - the Latin America and Caribbean network

Too Big to Ignore (TBTI; www.toobigtoignore.net) is a research network and knowledge mobilization partnership established to elevate the profile of small-scale fisheries (SSF), to argue against their marginalization in national and international policies, and to develop research and governance capacity to address global fisheries challenges. Network participants and partners are conducting global and comparative analyses, as well as in-depth studies of SSF in the context of local complexity and dynamics, along with a thorough examination of governance challenges, to encourage careful consideration of this sector in local, regional and global policy arenas. Comprising 15 partners and 62 researchers from 27 countries, TBTI conducts activities in five regions of the world. In Latin America and the Caribbean (LAC) region, we are taking a participative approach to investigate and promote stewardship and self-governance in SSF, seeking best practices and success stories that could be replicated elsewhere. As well, the region will focus to promote sustainable livelihoods of coastal communities. Key activities include workshops and stakeholder meetings, facilitation of policy dialogue and networking, as well as assessing local capacity needs and training. Currently, LAC members are putting together publications that examine key issues concerning SSF in the region and best practices, with a first focus on ecosystem stewardship. Other planned deliverables include comparative analysis, a regional profile on the top research issues on SSF, and a synthesis of SSF knowledge in LAC

e-Government as a regulatory response to the financial crisis: the case of the UK

This paper seeks to discuss EU policies relating to securities markets, created in the wake of the financial crisis and how ICT and specifically e-Government can be utilised within this context. This study utilises the UK as a basis for our discussion. The recent financial crisis has caused a change of perspective in relation to government services and polices. The regulation of the financial sector has been heavily criticised and so is undergoing radical change in the UK and the rest of Europe. New regulatory bodies are being defined with more focus on taking a risk-based system-wide approach to regulating the financial sector. This approach aims to prevent financial institutions becoming too big to fail and thus require massive government bail outs. In addition, a new wave of EU regulation is in the wind to update risk management practices and to further protect investors. This paper discusses the reasons for the financial crisis and the UK’s past and future regulatory landscape. The current and future approach and strategies adopted by the UK’s financial regulators are reviewed as is the lifecycle of EU Directives. The regulatory responses to the crisis are discussed and upcoming regulatory hotspots identified. Discussion of these issues provides the context for our evaluation of the role e-Government and ICT in improving the regulatory system. We identify several processes, which are elementary for regulatory compliance and discuss how ICT is elementary in their implementation. The processes considered include those required for internal control and monitoring, risk management, record keeping and disclosure to regulatory bodies. We find these processes offer an excellent opportunity to adopt an e-Government approach to improve services to both regulated businesses and individual investors through the benefits derived from a more effective and efficient regulatory system.