Can We Prevent Financial Crises?
Every financial crisis involves breakdowns in the management of banks, market transparency, and the regulation of financial institutions and markets. Starting with the basics of banking, this seminar will provide a framework for understanding the roles of regulators and banks (their management, boards of directors and shareholders) in ensuring a safe and sound banking system. We will take an in-depth look at earlier crises, notably the Panic of 1907, to examine how the introduction of a central bank and then later deposit insurance served to mitigate crises. We will apply these insights to the Crisis of 2008 to explain its origins and why it was so difficult to stabilize. Although broad reform legislation was passed after the Crisis of 2008, financial stability still seems illusive. The course is co-taught by Dr. Cumming, formerly First Vice President of the Federal Reserve Bank of New York, and Professor White to provide both a policy maker’s and an academic’s perspectives.