U.S. Banks in Crisis: Lessons from the Past, Questions for the Future
Before the current banking crisis, the U.S. last experienced a financial upheaval in the latter half of the 1980s and early 1990s in the savings and loan and banking sectors. Failures of financial institutions surged in the late 1980s and again began to rise dramatically in 2008. Government took strong action to address the crisis in each period, and in both instances has received blistering criticism for its attempts to bail out the largest banks. We will address questions of “moral hazard” in the financial system, and the degree to which government action creates and/or is constrained by moral hazard. In this seminar you will have the opportunity to do original research with the professor by working directly with bank data. This is a rare chance to gain a hands-on understanding of modern banking, bank crises, and what constitutes a sound financial institution.