Today on Capitol Hill

We will get more information today on whether the government is planning to institutionalize bailout in lieu of bankruptcy.  At 9 o'clock, the House Committee on Financial services will hold a hearing on systemic risk and resolution issues.  You can find the prepared testimonies and watch it here.  The lineup includes Paul Volcker, Arthur Levitt, Jeff Miron, Mark Zandi, and John Cochrane.

I think most of the discussion of a "systemic risk regulator" has so far been misguided.  I am very skeptical of how it would work in practice.  How does that meeting between the regulators and an individual bank go?  "So, in conclusion, while we find nothing wrong in your risk profile per se, we have observed systemwide too much leverage, so we are going to require your bank to restrict its lending at the margin?"  Or how about, "While you haven't done anything wrong yet, we think that if you continue to compete so aggressively for loans, you will endanger your competitors.  So back off."  If the regulatory process could work well enough to do that, it certainly would have worked better up until now.

UPDATE: The hearings can be seen here on CSPAN.