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Session 14 Financial Innovation and Leverage
Financial market innovation in recent years has expanded access to credit while introducing a host of new and complex financial instruments and practices. At the same time, the amount of debt held by institutions, consumers, and the government has increased, introducing additional risk. This session will discuss how current measures are addressing an orderly deleveraging process and regulation of financial markets, and what more is needed.
Presentations
Charles Calomiris Cato article; Forbes article; Slideshow
Markus Brunnermeier Slideshow
Speakers
Richard Brown
FDIC
Richard A. Brown is Chief Economist and Associate Director for Risk Analysis in the Division of Insurance and Research at the FDIC in Washington, D.C. His branch is responsible for identifying and analyzing emerging risks to the FDIC deposit insurance funds. This role includes analysis of current trends in the economy, the financial markets, and insured depository institutions, with a focus on bank risk management.
From 1996 to 2002, Dr. Brown was Chief of the Economic and Market Trends Section in the FDIC's former Division of Insurance. Prior to 1996, he served as a financial economist specializing in resolutions and asset disposition policy in the FDIC's former Division of Research and Statistics. He has also held research positions at the Resolution Trust Corporation (RTC), the Federal Savings and Loan Insurance Corporation (FSLIC), and the Federal Home Loan Bank Board (FHLBB).
Dr. Brown completed a Ph.D. in economics at The George Washington University in 1994 and a B.A. in economics at the University of Cincinnati in 1984.
Charles Calomiris
Columbia University
Professor Calomiris is one of the country’s leading authorities on financial institutions. His research spans the areas of banking, corporate finance, financial history and monetary economics. He has advised numerous firms, agencies and governments on the performance and regulation of financial institutions. Calomiris is a research associate at the National Bureau of Economic Research and directs the American Enterprise Institute’s project on financial regulation. He teaches international banking and a case course on business and finance in emerging market economies.
He has a BA, Yale, 1979; PhD, Stanford, 1985.
Markus Brunnermeier
Princeton University
Markus K. Brunnermeier is the Edwards S. Sanford Professor at Princeton University. He is a member of the Department of Economics and affiliated with Princeton's Bendheim Center for Finance and the International Economics Section. He is also a research associate at CEPR, NBER and CESifo, and an academic consultant to the Federal Reserve Bank of New York. He was awarded his Ph.D. by the London School of Economics (LSE), where he was also affiliated with its Financial Markets Group. He is a Sloan Research Fellow, an associated editor of the Journal of Finance, the Review of Financial Studies and on the editorial board of the Journal of Financial Intermediation. His research spans economics and finance. He is primarily interested in studying financial crises and significant mispricings due to institutional frictions, strategic considerations, and behavioral trading. His work shows that a bubble can emerge and persist since rational sophisticated traders prefer to ride it rather than attack it. His research also explains why liquidity dries up when it is needed most and has important implications for risk management. His research on belief distortions proposes a shift away from the rational expectations paradigm towards "optimal expectations.”