Document Type
Article
Publication Title
The New Republic
Publication Date
2011
ISSN
0028-6583
Keywords
Wall Street reform, short term IOUs, financial stability
Disciplines
Commercial Law | Law
Abstract
Any serious program for Wall Street reform should start with two words: “term out.” “Terming out” is a financial term of art, but its meaning is easily grasped. It simply means funding your business with long-term financing instead of short-term IOUs. To a far greater extent than is commonly understood, our financial sector funds its operations with extremely short-term borrowings. These IOUs must be paid back in a day, a week, or a month. By contrast, termed-out financial firms shun borrowings that come due in less than a year. A terming-out requirement would be costly for Wall Street, but the reward would be a safer and more resilient financial system. That’s a trade we should be willing to make.
Recommended Citation
Morgan Ricks,
A Former Treasury Adviser On How to Really Fix Wall Street, 2011 The New Republic.
(2011)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/912