When: Tuesday, September 11, 2018, 10:00 a.m. - 5:00 p.m. EDT
Where: https://www.brookings.edu/events/day-1-responding-to-the-global-financial-crisis/
Dozens of consequential decisions were made by the U.S. Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, and other government agencies during and after the financial crisis of 2007-2009, but little detail is available publicly as to how and why the elements of the rescue were designed the way they were. In an initiative led by former Federal Reserve Chairman Ben Bernanke and former Treasury Secretaries Tim Geithner and Hank Paulson, the Hutchins Center on Fiscal and Monetary Policy at Brookings and the Program on Financial Stability at the Yale School of Management are filling that gap by commissioning a series of papers by individuals who were actively involved in designing the elements of the rescue. The papers identify, document, and evaluate the decisions that U.S. authorities made during the crisis. The primary objective of the project is to answer the inevitable question that those who fight future financial crises will ask: Why and how did they do it the way they did in 2007-2009?
On September 11, 10 years after some of the worst moments of the crisis, some of the authors of the papers will present highlights of their findings in a full-day conference at Brookings.
Schedule:
10:00 a.m. -- Welcome
Ben Bernanke, Brookings
10:10 a.m. -- Overview: What happened?
Nellie Liang, Brookings
Andrew Metrick, Yale School of Management
10:40 a.m. -- Panel: The lender of last resort: Old and new
Moderator: Brian Sack, The D.E. Shaw Group
Lead speaker: Trish Mosser, Columbia University
Panelists: Pat Parkinson, Promontory Financial Group; Nathan Sheets, PGIM
In the early stages of the crisis, the Federal Reserve acted as a lender of last resort to stabilize the financial system, initially innovating its traditional practices and later invoking emergency authorities to expand lending to more counterparties and more collateral. What problems were they trying to fix? What were the key design decisions? What constraints did they face? How successful were these efforts?
11:30 a.m. -- Panel: Capital and guarantees for the banks
Moderator: Nellie Liang, Brookings
Lead speakers: Dan Jester, BDT & Company; Lee Sachs, Gallatin Point
Panelists: Jim Wigand, Millstein & Co.; Tim Clark, former Federal Reserve
At the worst of the financial crisis, the solvency of major banking institutions came into serious question. The Treasury, the Federal Reserve, FDIC, and other regulators had to determine how to keep the financial system functioning. What approaches did they consider, and what approaches were considered and discarded? What were the key decision points in guaranteeing liabilities of the banking system, injecting capital, etc.? What worked well, and what didn’t?
12:30 p.m. -- Buffet lunch
1:30 p.m. -- Panel: Beyond the banks
Moderator: David Wessel, Brookings
Lead speaker: Bill Dudley, former Federal Reserve Bank of New York
Panelist: Scott Alvarez, former Federal Reserve; Steve Shafran, AMRI Financial
Questions about solvency extended beyond the banks to all sorts of financial firms, including securities firms and AIG. How did authorities decide that the failure of these financial firms would cause material damage to the functioning of the financial system and economy? What tools did they consider and what tools did they use to prevent investor runs and disruptive failures? How did they weigh the consequences of potential bankruptcy of the auto companies in a fragile economy?
2:20 p.m. -- Panel: Government-sponsored enterprises and housing
Moderator: Neel Kashkari, Federal Reserve Bank of Minneapolis
Lead speaker: Michael Barr, University of Michigan
Panelist: Dan Jester, BDT & Company; Andreas Lehnert, Federal Reserve
Housing was at the root of the financial crisis. The unwinding of the house price bubble, record-high mortgage debt, and low risk premiums on mortgage securities had a massive depressive effect on the financial system and economy. What was done to support homeowners and the mortgage market? What was considered and rejected? Which tools proved most effective? How was the decision to put Fannie Mae and Freddie Mac into conservatorship made?
3:30 p.m. -- Panel: Monetary and fiscal policy around the world
Moderator: Janet Yellen, Brookings
Lead speakers: Jason Furman, Harvard Kennedy School of Government; Don Kohn, Brookings;
Panelist: Brian Sack, The D.E. Shaw Group; Ted Truman, Peterson Institute
Monetary and fiscal policies, both in the United States and abroad, were used aggressively to offset the contractionary effects on the macro economy of the severe stresses in financial and credit markets. How did policymakers calibrate these efforts? How did U.S. policymakers coordinate with foreign counterparts? How well were these efforts communicated? What were the constraints? How well did all this work?
4:10 p.m. -- Panel: So what have we learned?
Moderator: Andrew Metrick, Yale School of Management
Lead speaker: Meg McConnell, Federal Reserve Bank of New York
Panelists: Michele Davis, Morgan Stanley; Matt Kabaker, Centerbridge
Policies became more aggressive as the crisis intensified, starting with the provision of liquidity, to resolution, guarantees, and capital when solvency was in question. After ten years, what is the empirical evidence on the effects of the policies? What are the major criticisms and shortcomings? What lessons can we draw from the papers commissioned for this project that may prove useful for future crisis fighters?
4:45 p.m. -- Closing