The Fed Models Failure

The U.S. financial system faces a major, growing, and much under-appreciated threat from the Federal Reserve’s risk modeling agenda—the “Fed stress tests.” These were intended to make the financial system safe but instead create the potential for a new systemic financial crisis. The principal purpose of these models is to determine banks’ regulatory capital requirements—the…



Relying on one’s vision and relying on one’s reason are similar in one respect: in both cases, the reliance is immediate. When I see a tree, I do not infer its existence from my experience any more than I infer the correctness of a logical inference from the fact that I can’t help believing the…