Leaving aside the issue of whether the liquidity requirements are set at the right levels, the question is whether this is good public policy or a subsidization of lending to governmental entities that bypasses the private sector. Notably, Representative Maloney describes banking regulators as "senseless" when they take any action that may burden governmental entities. Apparently, when they impose burdens on the private sector, they become Solomonic.

Professor Pirrong's analysis provokes important policy questions. Does the ability of the CCPs to demand more margin without being subject to contractual limits create a liquidity crisis (or exacerbate a downward spiral during a time of market volatility) when clearing firms and customers sell off positions to meet CCPs' margin demands? The risk that CCPs may damage other market participants is at least as great as that of a direct CCP failure. This does not seem to be a risk…

Senator Warren raises important questions about enforcement patterns against corporate officers. Her criticisms fall into three categories: (i) the penalty imposed was too light; (ii) the government should have taken the offender to court rather than entering into an out-of-court settlement; and (iii) individuals at the relevant entity should have been charged.

The first two criticisms are likely to be met with skepticism. From the vantage of those who work within the…

Given the scope of its responsibilities under Dodd-Frank, the CFTC is underfunded. Many of those responsibilities might be ill-conceived, but that is not the fault of the CFTC; the blame belongs with Congress. Indeed, Chair Massad has pointed out that the CFTC is in the process of reducing some of the burdens it had imposed previously. Even so, progress in that direction should be faster.

That said, it is difficult to feel sympathy for an agency that continues to push for rules…