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Session 11 Lessons Of The Great Credit Crunch Of 2007-08
Financial market innovation in recent years has expanded access to credit while introducing a host of new and complex financial instruments and practices. These innovations lie at the heart of the credit market dislocations that began in mid-2007 and are now taking a toll on real U.S. economic activity. This session will discuss the causes of the crisis, short-term measures needed to address it, and the long-run implications of this historic event. Which critical assumptions have been disproved? Which areas of the financial safety net need to be strengthened, and how? Three pre-eminent experts on financial market innovation and the nature of financial crises will discuss these and other important questions.
Speaker Materials
William Poole podcast on Bloomberg.com with Tom Keene
Martin Baily podcast on Bloomberg.com with Tom Keene
Speakers
Brian Sack
Macroeconomic Advisers
Brian Sack is Senior Economist and Vice President at Macroeconomic Advisers. As Deputy Directory of the Monetary Policy Insights service he collaborates with Dr. Meyer on all aspects of the service. Dr. Sack joined the staff of the Board of Governors of the Federal Reserve in 1997 and became the head of the Monetary and Financial Market Analysis section in 2003. In that capacity, he directed the Federal Reserve Board’s analysis of various segments of U.S. fixed-income markets, including Treasuries, swaps, and interest rate futures. Those efforts focused on interpreting and predicting the influence of economic and monetary policy developments on the yield curve and other asset prices, as well as on extracting information from market prices that was relevant for policy decisions. Dr. Sack’s position at the Board placed him as a crucial contributor to the staff’s support of the FOMC. He and his section worked extensively on the Greenbook and the Bluebook prepared by the staff, and on numerous other documents addressing relevant topics for FOMC decisions. Dr. Sack worked closely with FOMC members, including extensive research projects with Governor Kohn and Governor Bernanke. Dr. Sack has published a number of research papers on issues related to monetary policy decisions and the fixed income markets. Specific topics have included estimating monetary policy rules, measuring the effects of FOMC communications, assessing the impact of monetary policy decisions on asset prices, and evaluating the behavior of Treasury inflation-indexed debt. His papers have appeared in the Quarterly Journal of Economics, the Journal of Monetary Economics, the Journal of Money, Credit, and Banking, the Journal of Fixed Income, and the Journal of Futures Markets. Dr. Sack received a Ph.D. in economics from MIT in 1997.
Martin Neil Baily
The Brookings Institution
Martin Baily, chairman of the Council of Economic Advisers during the Clinton administration (1999–2001) and one of three members of the council from 1994 to 1996, focuses on issues of globalization, productivity and competitiveness, Social Security reform, and U.S. economic policy at the Brookings Institution.
Martin Baily re-joined Brookings in September 2007 to develop a program of research on business and the economy. He is studying issues of productivity, technology, globalization and trade and exploring the impact of new technologies on the economy.
Dr. Baily is also a Senior Advisor to McKinsey & Company, assisting the McKinsey Global Institute on projects on globalization and productivity. He is an economic adviser to the Congressional Budget Office and a Director of The Phoenix Companies of Hartford CT.
Prior to his return to Brookings, Baily was a Senior Fellow at the Peterson Institute for International Economics. His book Transforming the European Economy was published by the Institute in 2004. In August 1999, Dr. Baily was appointed as Chairman of the Council of Economic Advisers. As Chairman, Dr. Baily served as economic adviser to the President, was a member of the President’s Cabinet and directed the staff of this White House agency. He completed his term as Chairman on January 19, 2001. During that period he also served as President of the Economic Policy Committee of the Organization for Economic Cooperation and Development. Dr. Baily previously served as one of the three Members of the President’s Council of Economic Advisers from October 1994 until August 1996.
Dr. Baily was a Principal at McKinsey & Company at the Global Institute in Washington, D. C. from September 1996 to July 1999. He was also a visiting fellow at the Global Institute l993-1994. Dr. Baily helped lead project teams using industry case studies to explore service and manufacturing productivity and employment, as well as a series of country studies, looking at France, Germany, the Netherlands, the UK, Brazil, Korea and Russia. Dr. Baily has also worked with McKinsey client teams, providing counseling to CEO’s on economic issues.
Dr. Baily earned his Ph.D. in economics in 1972 at the Massachusetts Institute of Technology. After teaching at MIT and Yale, he became a Senior Fellow at the Brookings Institution in 1979 and a Professor of Economics at the University of Maryland in 1989. His research has focused on wage setting, macroeconomic policy, innovation, productivity and economic growth.
He has served as an academic advisor to the Federal Reserve Board and testified numerous times before Congress. He served on a panel convened by the Office of Technology Assessment and was the Vice-Chairman of a panel of the National Academy of Sciences/National Research Council to investigate the effect of computers on productivity. He was a research associate of the National Bureau of Economic Research. He is the author of many professional articles, and the co-author or editor of five books.
William Poole
Cato Institute
Distinguished Scholar in Residence, University of Delaware
William Poole is Senior Fellow at the Cato Institute, Senior Advisor to Merk Investments and, as of fall 2008, Distinguished Scholar in Residence at the University of Delaware.
Poole retired as President and CEO of the Federal Reserve Bank of St. Louis in March 2008. In that position, which he held from March 1998, he served on the Federal Reserve’s main monetary policy body, the Federal Open Market Committee. He directed the Bank’s main office in St. Louis and its three branches in Memphis, Little Rock and Louisville.
Before joining the St. Louis Fed, Poole was Herbert H. Goldberger Professor of Economics at Brown University. He served on the Brown faculty from 1974 to 1998 and the faculty of The Johns Hopkins University from 1963 to 1969. Between these two university positions, he was senior economist at the Board of Governors of the Federal Reserve System in Washington. He was a member of the Council of Economic Advisers in the first Reagan administration, from 1982 to 1985.
Poole received his AB degree from Swarthmore College in 1959, and MBA and Ph.D. degrees from the University of Chicago in 1963 and 1966, respectively. Swarthmore honored him with the Doctor of Laws degree in 1989. He was inducted into The Johns Hopkins Society of Scholars in 2005 and presented with the Adam Smith Award by the National Association for Business Economics in 2006. In 2007, the Global Interdependence Center presented him its Frederick Heldring Award.
Poole has engaged in a wide range of professional activities, including publishing numerous papers in professional journals. He has published two books, Money and the Economy: A Monetarist View, in 1978, and Principles of Economics, in 1991. During his 10 years at the St. Louis Fed, he gave over 150 speeches on a variety of topics. In 1980-81, he was a visiting economist at the Reserve Bank of Australia and in 1991, Bank Mees and Hope Visiting Professor of Economics at Erasmus University in Rotterdam. At various times, he served on advisory boards of the Federal Reserve Banks of Boston and New York, and the Congressional Budget Office.
Poole was born and raised in Wilmington, DE. He is married to Geraldine Poole; they have four sons.
Robert H. Dugger
Tudor Investment Corporation
Robert Dugger is Managing Director of Tudor Investment Corporation. He was previously director for policy and chief economist at the American Bankers Association, leading a panel of nationally recognized bank officers in developing a plan to deal with the U.S. savings and loan crisis. Dugger served as the chief economist of the Senate Banking Committee and senior staff member of the Financial Institutions Subcommittee of the House Financial Institutions Committee. Dugger began his career at the Federal Reserve Board. He is a member of Virginia Governor Tim Kaine's Strong Start pre-kindergarten council and recently served as co-chairman of Governor John Warner's Virginia Early Learning Council. He is a trustee of the Committee for Economic Development and chairman of the Invest in Kids Working Group and the Partnership for America's Economic Success. Dugger received a bachelor's degree from Davidson College and a Ph.D. from the University of North Carolina at Chapel Hill.
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