connectedness and contagion protecting the financial system from panics

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Connectedness And Contagion

Author : Hal S. Scott
ISBN : 9780262332163
Genre : Business & Economics
File Size : 90. 6 MB
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The Dodd--Frank Act of 2010 was intended to reform financial policies in order to prevent another massive crisis such as the financial meltdown of 2008. Dodd--Frank is largely premised on the diagnosis that connectedness was the major problem in that crisis -- that is, that financial institutions were overexposed to one another, resulting in a possible chain reaction of failures. In this book, Hal Scott argues that it is not connectedness but contagion that is the most significant element of systemic risk facing the financial system. Contagion is an indiscriminate run by short-term creditors of financial institutions that can render otherwise solvent institutions insolvent. It poses a serious risk because, as Scott explains, our financial system still depends on approximately $7.4 to $8.2 trillion of runnable and uninsured short-term liabilities, 60 percent of which are held by nonbanks. Scott argues that efforts by the Federal Reserve, the FDIC, and the Treasury to stop the contagion that exploded after the bankruptcy of Lehman Brothers lessened the economic damage. And yet Congress, spurred by the public's aversion to bailouts, has dramatically weakened the power of the government to respond to contagion, including limitations on the Fed's powers as a lender of last resort. Offering uniquely detailed forensic analyses of the Lehman Brothers and AIG failures, and suggesting alternative regulatory approaches, Scott makes the case that we need to restore and strengthen our weapons for fighting contagion.

Connectedness And Contagion

Author : Hal S. Scott
ISBN : 9780262034371
Genre : Business & Economics
File Size : 29. 20 MB
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An argument that contagion is the most significant risk facing the financial system and that Dodd¬Frank has reduced the government's ability to respond effectively.

The Money Problem

Author : Morgan Ricks
ISBN : 9780226330327
Genre : Business & Economics
File Size : 46. 17 MB
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In "The Money Problem, "Morgan Ricks argues for a reform of the American monetary system. Taking up foundational questions of monetary policy, he asks: how would we construct a monetary system if we were starting from scratch? What are the characteristics of a monetary instrument? What do we mean by, and want from, financial stability? Is there a respectable basis for the special legal status of deposits ? How should we think about the relationship between private money creation and the issuance of money by the state s central bank, and how should the government control the supply of monetary instruments? In answer to these questions, Ricks erects a theoretically elegant institutional design, a new structure of money and banking that emphasizes two core features: First, private money (cash-equivalent instruments) would be taken much more seriously and treated as cash deposits by commercial and central banks alike. Monetary instruments must be identified and defined by their function; and should be issued only by a designated class of commercial entities, licensed by the state for this specific purpose. Second, such monetary instruments would then be nondefaultable, formally backed by the sovereign public treasury, as sturdy as a dollar bill. By introducing formal state sponsorship to what was previously private credit, Ricks design mitigates the risk of catastrophic financial panic."

The Chicago Plan New Deal Banking Reform

Author : Ronnie J. Phillips
ISBN : 1563244691
Genre : Business & Economics
File Size : 85. 16 MB
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This work presents a comprehensive history and evaluation of the role of the 100 percent reserve plan in the banking legislation of the New Deal reform era from its inception in 1933 to its re-emergence in the current financial reform debate in the US.

Understanding Financial Crises

Author : Franklin Allen
ISBN : 9780191622861
Genre : Business & Economics
File Size : 35. 71 MB
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What causes a financial crisis? Can financial crises be anticipated or even avoided? What can be done to lessen their impact? Should governments and international institutions intervene? Or should financial crises be left to run their course? In the aftermath of the Asian financial crisis, many blamed international institutions, corruption, governments, and flawed macro and microeconomic policies not only for causing the crisis but also unnecessarily lengthening and deepening it. Based on ten years of research, the authors develop a theoretical approach to analyzing financial crises. Beginning with a review of the history of financial crises and providing readers with the basic economic tools needed to understand the literature, the authors construct a series of increasingly sophisticated models. Throughout, the authors guide the reader through the existing theoretical and empirical literature while also building on their own theoretical approach. The text presents the modern theory of intermediation, introduces asset markets and the causes of asset price volatility, and discusses the interaction of banks and markets. The book also deals with more specialized topics, including optimal financial regulation, bubbles, and financial contagion.

Freedom S Forge

Author : Arthur Herman
ISBN : 9781400069644
Genre : History
File Size : 25. 4 MB
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The Pulitzer Prize-finalist author of Gandhi & Churchill assesses the pivotal role of American big business in building weapons and enabling industrial dominance for Allied forces in World War II, tracing the contributions of Danish immigrant William Knudsen and shipbuilding industrialist Henry Kaiser.

Managing Risk And Uncertainty

Author : Richard Friberg
ISBN : 9780262528191
Genre : Business & Economics
File Size : 55. 15 MB
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A comprehensive framework for assessing strategies for managing risk and uncertainty, integrating theory and practice and synthesizing insights from many fields.

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