Hester Peirce

Hester Peirce

  • Director of Financial Markets Working Group
  • Senior Research Fellow

Hester Peirce is a senior research fellow at the Mercatus Center at George Mason University and director for the Financial Markets Working Group. Her primary research interests relate to the regulation of the financial markets.

Before joining Mercatus, Peirce served on Senator Richard Shelby’s staff on the Senate Committee on Banking, Housing, and Urban Affairs. In that position, she worked on financial regulatory reform following the financial crisis of 2008 as well as oversight of the regulatory implementation of the Dodd-Frank Act.

Peirce served at the Securities and Exchange Commission as a staff attorney and as counsel to Commissioner Paul S. Atkins. Before that, she clerked for Judge Roger B. Andewelt on the Court of Federal Claims and was an associate at a Washington, DC law firm.

She currently serves on the Investor Advisory Committee, which advises the Securities and Exchange Commission. Peirce’s work has been published in such outlets as the Hill and American Banker, and she is a regular contributor to Real Clear Markets. She is the editor of, and a contributor to, the book Dodd-Frank: What It Does and Why It’s Flawed, published by Mercatus in 2012.

Hester Peirce earned her BA in economics from Case Western Reserve University and her JD from Yale Law School.

Working Papers

Hester Peirce | Jan 06, 2015
In a new paper for the Mercatus Center at George Mason University, senior research fellow Hester Peirce demonstrates that FINRA is not structured in a way to produce high-quality regulation and is not accountable to the government, the industry, or the public.
Hester Peirce | Nov 07, 2014
In a new study for the Mercatus Center at George Mason University, scholar Hester Peirce shows that such methods undermine public confidence in the regulatory process and harm regulated industries’ compliance efforts due to uncertain requirements and an ever-changing regulatory landscape.
Hester Peirce | May 01, 2014
American International Group, Inc. (AIG), a large insurance company, received a massive bailout during the financial crisis in response to difficulties centered on the company’s multifaceted exposure to residential mortgage-backed securities. The company is back on its feet, albeit in more streamlined form and with a new overseer—the Federal Reserve. This paper focuses on a piece of the AIG story that is rarely told—the role of the company’s securities-lending program in imperiling the company and some of its insurance subsidiaries. The paper argues that regulatory responses to AIG have been inapt. AIG did not need another regulator, but better risk management. The markets would have conveyed that message clearly had regulators not intervened to ensure AIG’s survival. This paper adds the missing piece to the AIG story in an effort to challenge the notion that more regulatory oversight for companies like AIG will prevent future crises.
Hester Peirce, Robert Greene | Apr 02, 2014
For decades, money market funds (MMFs) were thought to be safe, low-risk investments. The financial crisis of 2007–2009 cast MMFs in a new, less favorable light, which prompted calls for reform. Our paper offers a reform alternative that builds on MMF boards of directors and their well-established responsibility for making key decisions for MMFs. After a brief overview of the regulatory history of MMFs, we describe the responsibilities that boards have under current law, the problems MMFs encountered during the crisis, and market and government responses to these problems. Evidence shows that during the crisis, investors were discerning in deciding whether and when to run; more risky, less liquid funds experienced higher volumes of redemptions. This finding, along with our assessment of funds’ boards of directors’ responsibilities, helps to lay the groundwork for considering the various options for addressing problems still facing MMFs, including our proposal to allow boards to gate their funds when faced by potentially destabilizing redemption pressures.

Charts

Policy Briefs

Testimony & Comments

Hester Peirce | Jun 11, 2015
Financial regulation should consist of clear, consistently enforced rules within which customers and financial institutions can freely interact. A well-functioning market enables people who need financing to obtain it efficiently and at a competitive price. Market forces reward financial companies that serve consumers well and discipline firms that fail to provide products and services in a form and at a price that consumers want.
Hester Peirce | May 13, 2015
The Dodd-Frank Wall Street Reform and Consumer Protection Act—does not make another crisis less likely. To the contrary, it sets the stage for another, worse crisis in the future. Government regulation—from bank regulation to housing policy to credit rating agency regulation—played a key role in the crisis. These policies shaped market participants’ behavior in destructive ways. Dodd-Frank continues that pattern.
Hester Peirce, Kristine Johnson | Feb 04, 2015
This comment, which reiterates concerns laid out in the attached opinion piece, does not represent the views of any particular affected party or special interest group but is designed to assist FINRA as it considers implementing the Comprehensive Automated Risk Data System (CARDS).
Hester Peirce, Vera Soliman | Sep 10, 2014
The Bureau initiated its database without due consideration of the problem the Bureau was trying to solve or the costs and benefits of the database. Rather than expanding the database’s potential to cause unintended harm, the Bureau should return to the drawing board.

Expert Commentary

Jun 03, 2015

Congress is marking the five-year anniversary of Dodd-Frank with legislative efforts in the financial regulatory arena. Improvements to regulatory process are one component of these initiatives. Procedural reforms are not very glamorous, but they are essential in the pursuit of effective regulatory oversight of the financial industry.
May 20, 2015

Dodd-Frank is rounding the bend to its five-year mark. Its vocal cheering section does not seem to notice that it's looking a bit haggard. One area in which its weakness is evident is over-the-counter derivatives reform, which accounts for approximately 20 percent of Dodd-Frank's pages and much of its rhetoric. Dodd-Frank relies on central counterparty clearinghouses to bring order to over-the-counter derivatives-financial contracts that help companies manage their risks. Although Title VIII of the Act gives a nod to clearinghouses as a potential source of new risk, that concern gets lost in all the cheering for clearing.
May 06, 2015

Efforts to add a new restructuring option to the mix may cast doubt on Puerto Rico's commitment to more substantive efforts to deal with its debt problem, such as shrinking its public sector and unleashing its private sector with regulatory reform. Retroactive changes to the law may cure creditors of their historically over-eagerness to finance Puerto Rico's public sector, which has not been good for the territory. But such changes also may cause the pendulum to swing too far the other way, as investors shy away from lending in the face of a potentially uncertain and shifting legal framework.
Apr 29, 2015

The CFPB was created by Dodd-Frank to protect consumers as they engage in financial transactions. The complexity and importance of consumer financial products and services, the champions of the bureau reasoned, warranted the formation of a new agency charged specifically with looking out for consumers' best interests. The reality is not so rosy.

Contact

Hester Peirce

Books

Podcasts

Hester Peirce | September 10, 2014
Hester Peirce Discusses Her Public Interest Comment on the CFPB’s Proposal to Expand Its Consumer Complaint Database…
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