This is the Cato Daily Podcast for Monday, September 28, 2015. I'm Caleb Brown.

There are good things in Dodd Frank, but changes to how firms are treated

when it comes to future bailouts rest upon a flawed idea that our economy needs a lender of

last resort. So says Cato's Mark Calabria.

We should start with the Federal Reserve's actual so-called 13-3 authorities which are called

such because it's paragraph three of

Section 13 of the Federal Reserve Act. These were created in 1932, used

extensively, but generally in a minor way during the Great Depression and what

separates this out from the Fed's usual authorities is it's really meant for

non-banks so the banks can just go to what's called the discount window.

So 13.3 is often kind of thought of as a discount window for non-banks.

It was not used since the Great Depression.

Up until 2008 assisted purchase of Bear Stearns by J.P. Morgan.

So we really went from say 1935 to 2008 with Alth's authority being used.

It was a relatively dormant authority.

You know, the Fed had talked about it on occasion, you know, certainly interestingly enough

a few years before 2008, I think about 2004 2004 the Fed had published a paper on it so it was certainly

in their thoughts had the situation arose but it really was a sense of,

a big shocker, and I think it's fair to say,

one of the many things that really angered the public

about the rescues was this sense of,

wow, I didn't know the Fed could do that.

...