After the Crash

Financial Crises and Regulatory Responses

Sharyn O'Halloran, Thomas Groll, Sharyn O'Halloran, Thomas Groll

• Publisher: Columbia University Press
• Year: 2019
• Topic: History
• eBook ISBN:
  9780231549998
• Subtopic: Economic History
• Index: History

The 2008 crash was the worst financial crisis and the most severe economic downturn since the Great Depression. It triggered a complete overhaul of the global regulatory environment, ushering in a stream of new rules and laws to combat the perceived weakness of the financial system. While the global economy came back from the brink, the continuing effects of the crisis include increasing economic inequality and political polarization.

After the Crash is an innovative analysis of the crisis and its ongoing influence on the global regulatory, financial, and political landscape, with timely discussions of the key issues for our economic future. It brings together a range of experts and practitioners, including Joseph Stiglitz, a Nobel Prize winner; former congressman Barney Frank; former treasury secretary Jacob Lew; Paul Tucker, a former deputy governor of the Bank of England; and Steve Cutler, general counsel of JP Morgan Chase during the financial crisis. Each poses crucial questions: What were the origins of the crisis? How effective were international and domestic regulatory responses? Have we addressed the roots of the crisis through reform and regulation? Are our financial systems and the global economy better able to withstand another crash? After the Crash is vital reading as both a retrospective on the last crisis and an analysis of possible sources of the next one.

CHAPTER 1

INTRODUCTION

Overview of the Financial Crisis and Its Impacts

SHARYN O’HALLORAN, THOMAS GROLL, AND GERALDINE McALLISTER

On March 10, 2008, rumors spread that Bear Stearns Companies, Inc., the venerable eighty-five-year-old investment firm, faced default after prices for its subprime mortgage-backed securities plummeted. Despite assurances of the then CEO, Alan Schwartz, that the company had sufficient funds, clients furiously withdrew their deposits. Within forty-eight hours, the bank’s precarious liquidity position deteriorated dramatically. Its stock price plunged by 50 percent, dropping from $61.58 to $30.85. Economist William Dudley of the Federal Reserve Bank of New York ominously noted that if “the vicious circle were to continue unabated, the liquidity issues could become solvency issues, and major financial intermediaries could conceivably fail.”¹ As Bear Stearns stood at the brink of collapse, financial markets...

Table of contents

• Cover 
• Title Page
• Copyright
• Dedication
• Contents 
• Foreword
• Preface
• 1. Introduction: Overview of the Financial Crisis and Its Impacts
• Part I: The Financial Crisis in Perspective
• Part II: Creating the Right (dis)Incentives
• Part III: Use and (Ab)use of Models in Predicting Financial Outcomes
• Part IV: Regulating for the Next Crisis?
• Part V: The Origins of the Next Financial Crisis
• Concluding Remarks
• Contributors
• Index