A Presentation on Financial Regulation and the Federal Budget
Presentation
Presentation by Michael Falkenheim, a senior adviser in CBO’s Financial Analysis Division, at a joint seminar by CBO and the Congressional Research Service.
Financial regulation affects the federal budget directly through spending for programs that support the stability of financial institutions and through the taxes and fees that those institutions pay. Regulation also affects the budget indirectly through its effects on the economy. Those effects generate a trade-off: Increased financial regulation may lower the likelihood of a financial crisis and mitigate the severity of any crisis that occurred, but it may also raise the cost of financing for investments.
This presentation highlights three illustrative polices from CBO’s report Financial Regulation and the Federal Budget and finds that the largest budgetary effects of implementing them would stem from macroeconomic feedback.