Fisher Center for Real Estate and Urban Economics

The financial distress of investment banks and the GSEs (government sponsored enterprises, namely Fannie Mae and Freddie Mac) has received intense focus recently in both financial markets and regulatory circles. As a result, there is a consensus that new methods of regulation are necessary to minimize the likelihood of future governmental bailouts. This paper explores the benefits of reregulating the investment banks and the GSEs by applying the monoline principles that have been long established in regulating catastrophe insurance firms.