Just 10 years ago, in October 1987, the stock market suffered its deepest short-term plunge since the Great Depression, a searing event for investors. This first in a series of annual volumes on the financial services industry from the Brookings Institution and the Wharton School at the University of Pennsylvania examines the ’87 crash and its aftermath. The papers in this inaugural volume, as well as brief comments on the papers, are written by some of the leading financial experts from the corporate, government, and academic communities in the United States. Future volumes will address other important issues affecting the financial services industry and thus continue to be a source of invaluable analysis and information for participants in the industry, financial regulators, policymakers, and everyone concerned with financial services. Contents of this issue include: “The Crash, the Exposed Problems, and the Remedies” by Nicholas Brady, Former Secretary of the Treasury; E. Gerald Corrigan, Former President, New York Federal Reserve Bank; and Leo Melamed, Chairman Emeritus, Chicago Mercantile Exchange “Circuit Breakers and Program Trading Limits: What Have We Learned?” by Lawrence Harris, University of Southern California “Trends in Volatility” by G. William Schwert, University of Rochester “Advances in Clearing and Settlement” by David B. Humphrey, Florida State University “New Instruments: Added Risk or Risk Management” by Stephen Figlewski, New York University “Has the Rise of Mutual Funds Increased Market Instability?” by Vincent A. Warther, University of Michigan “Internationalization of Markets: How Has It Affected Stability?” by Ingrid M. Werner, Stanford University, and Linda L. Tesar, University of Michigan “Challenges Posed by Systemic Risk in a Global Financial Marketplace: Views from the Regulators” by Philip F. Bartholomew, Office of the Comptroller of the Currency; Jonathan R. Macey, Cornell Law School; and Erik R. Sirri, Securities and Exchange Commission
Robert E. Litan is a senior fellow in Economic Studies at the Brookings Institution and vice president for research and policy at the Kauffman Foundation. Among his many books is Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity (Yale University Press, 2007), written with William J. Baumol and Carl J. Schramm. Anthony M. Santomero is president of the Federal Reserve Bank of Philadelphia and former director of the Financial Institutions Center at the Wharton School, University of Pennsylvania.