The Swaps Pushout Rule: Much Ado About the Wrong Thing?

A provision of the Dodd-Frank Act popularly known as the “swaps pushout rule” prohibited FDIC-insured banks from entering into certain types of swaps contracts. Congress recently reversed this provision, so that banks can continue trading in these swaps. The reversal provoked an outcry from parties concerned that it would put “taxpayers right back on the hook for bailing out big banks.”[1]

In a new paper, The Swaps Pushout Rule: Much Ado about the Wrong Thing?, we argue that the rule would have done little to protect taxpayers directly from the risks of these transactions. This is … Read more