Alex J. Pollock

Alex J. Pollock is a distinguished senior fellow at the R Street Institute in Washington, DC. He was President and CEO of the Federal Home Loan Bank of Chicago 1991-2004.

The Fed: Can the World’s Biggest S&L Get Back to Normal?

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The balance sheet of today’s Federal Reserve makes it the largest 1980s-model savings and loan in the world, with a giant portfolio of long-term, fixed rate mortgage securities combined with floating rate deposits.  This would certainly have astonished the legislative fathers of the Federal Reserve Act like Congressman and then Senator Carter Glass, who strongly held that the Fed should primarily be about discounting short-term commercial notes.

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Taking on Leviathan


Thomas Hobbes (1588-1679), the great philosopher of the authoritarian state, in a famous metaphor portrayed the government as a dominating giant or Leviathan, animated by absolute sovereignty, and passing out rewards and punishments as it saw fit. It alone could control the unruly passions of the people and create stability and safety.

Today’s “administrative state”—or government bureaucracy, acting simultaneously as sovereign legislator, executive, and judge—brings Hobbes’ image of the giant vividly to mind.

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Power, Independence, and Guessing

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The Power and Independence of the Federal Reserve is an informative and provocative history of the Fed and its remarkable evolution over a hundred years’ time: a complex institution, in a complex and changing environment.

Very importantly, author Peter Conti-Brown has included the Fed’s intellectual evolution, or the shifting of the ideas that shape its actions as these ideas go in and out of central banking fashion. This account makes readers wonder what new ideas and theories the leaders of the Fed will adopt, reinforce by groupthink with their fellow central bankers, and try out on us in future years.

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Puerto Rico:  A Big Default—What Next?

Flag of Puerto Rico in a stack of coins.(series)

Rexford Tugwell, sometimes known as “Rex the Red” for his admiration of the 1930s Soviet Union and his fervent belief in central planning, was made Governor of Puerto Rico by President Franklin Roosevelt in 1941.  Among the results of his theories was the Government Development Bank of Puerto Rico, a bank designed as “an arm of the state,” which is a central element in the complicated inner workings of the Puerto Rican government’s massive insolvency. The bank has just defaulted on $367 million of bonds, the first, but unless there is Congressional action, not the last, massive default by the Puerto…

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Risk Doesn’t Stand Still

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Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe explores the movement and transformation of risks in adapting, self-referencing systems, of which financial systems are a notable example. In this provocative new book, the Wall Street Journal’s chief economics commentator Greg Ip contemplates how actions to reduce and control risk are often discovered to have increased it in some other way, and thus, “how safety can be dangerous.”

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Searching for Loyalty and Prudence


In his provocative and knowledgeable new book, Other People’s Money: The Real Business of Finance, John Kay considers the complex ways that financial systems operate in between the real savers, on one hand, and the real investments, on the other.

He observes disapprovingly how very large contemporary financial systems have become, how much talent they absorb, how big are the bonuses they pay, how they often have lost sight of their basic fiduciary duty, and especially that “volumes in trading in financial markets have reached absurd levels.”

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The Courage to Gamble

Large surface covered with US cash notes

Ben Bernanke’s new book, The Courage to Act, demonstrates throughout its 579 pages the fundamental uncertainty faced by central bankers, Treasury officers, and everybody else when dealing with financial cycles, panics and recoveries.  “But if the last few years had taught us anything, it was that we had to be humble about our ability to detect emerging threats to financial stability,” he writes. 

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Solving a Problem Like Puerto Rico

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Editor’s Note: The following is Alex Pollock’s testimony to the Senate Judiciary Committee on the subject of Puerto Rico’s fiscal problems, delivered December 1, 2015.

Mr. Chairman, Ranking Member Leahy, and Members of the Committee, thank you for the opportunity to be here today.  I am Alex Pollock, a resident fellow at the American Enterprise Institute, and these are my personal views.  Immediately before joining AEI, I was President and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004.  I have published numerous articles on financial systems and credit crises, including municipal debt crises.

The government of Puerto Rico, having run a long series of constant budget deficits, has accumulated a very large debt which according to its own statements, it cannot pay.

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A Balanced View of Human Limitations

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In Can Financial Markets Be Controlled?, Howard Davies demonstrates his long experience in, and careful thinking about, the instabilities of financial systems. Possible reforms are weighed sensibly and realistically in this short (109 pages) and substantive book. The author displays a refreshing humility about what the human mind is capable of when faced by the uncertainty of the financial future. He points out that “few anticipated the crisis” that began in 2007, and that the “judgments and forecasts” of economists, regulators, and central bankers, “widely shared at the time,” turned out to have been “catastrophically wrong.” Whose fault was it all? Who…

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Hayek for Everybody

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Donald Boudreaux has done us the favor of writing a popularized primer on the foundational thought of the great economist, Friedrich Hayek. His timing is good. For sadly, as Vaclav Klaus, the free-market president of the Czech Republic from 2003 to 2013, says in the book's foreword: “State interventionism is back and growing.” The once-vivid lessons of the failures and crimes of communist regimes are fading in the group memory, 25 years after the collapse of the Berlin Wall and its accompanying socialist ideology. Dirigiste government bureaucrats are busy giving orders, arrogantly convinced that they know what is economically best for…

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