Day 1: Responding to the Global Financial Crisis
What we did and why we did it
Past Event
Day 1: AM Session
Dozens of consequential decisions were made by U.S. authorities during and after the financial crisis of 2007-2009. It is important to understand how and why the elements of the rescue were designed the way they were. In an initiative led by Ben Bernanke, 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 papers by individuals who were actively involved in designing the elements of the rescue. The primary objective 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 presented highlights of their findings in a full-day conference at Brookings. Preliminary versions of some of the papers will be available below as working papers. You can learn more about the project by visiting the Program on Financial Stability at the Yale School of Management.
Other available materials include:
- An 85-page book that illustrates the crisis in pictures. Download it here (PDF).
- 13 working papers available for download below.
- Video Ben Bernanke, Tim Geithner, and Hank Paulson in conversation with Andrew Ross Sorkin at Brookings.
Agenda
Welcome
Ben S. Bernanke
Distinguished Senior Fellow - Economic Studies - The Brookings Institution
From this Session
Overview
What happened?
Nellie Liang
Undersecretary for Domestic Finance - United States Department of the Treasury
Former Senior Fellow - Economic Studies
Andrew Metrick
Janet L. Yellen Professor of Finance & Management - Yale University
Session Materials
Panel
The lender of last resort: Old and new
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?
Patricia Mosser
Senior Research Scholar of International & Public Affairs - Columbia University
Director, MPA Program in Economic Policy Management - Columbia University
Session Materials
From this Session
Panel
Capital and Guarantees for the Banks
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?
Nellie Liang
Undersecretary for Domestic Finance - United States Department of the Treasury
Former Senior Fellow - Economic Studies
From this Session
Panel
Beyond the Banks
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?
David Wessel
Director - The Hutchins Center on Fiscal and Monetary Policy
Senior Fellow - Economic Studies
Scott Alvarez
From this Session
Panel
Government Sponsored Enterprises and Housing
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?
From this Session
Panel
Monetary and Fiscal Policy Around the World
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?
Janet L. Yellen
United States Secretary of the Treasury - United States Department of the Treasury
Former Distinguished Fellow in Residence - Economic Studies
Jason Furman
Former Brookings Expert
Aetna Professor of the Practice of Economic Policy - Harvard University
Nonresident Senior Fellow - Peterson Institute for International Economics
Donald Kohn
Robert V. Roosa Chair in International Economics
Senior Fellow - Economic Studies
From this Session
Panel
So what have we learned?
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?
William B. English
Professor in the Practice of Finance - Yale School of Management
Former Director of Division of Monetary Affairs - Federal Reserve
Session Materials
From this Session
Closing Remarks
Hank Paulson
Chairman - Paulson Institute
Timothy F. Geithner
President - Warburg Pincus
From this Session
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