America’s financial system has faced its greatest challenge in 70 years. The crisis originated in America’s subprime mortgage market, and spread quickly to other debt and equity markets. Some large financial institutions failed, and others were imperiled. How could such a sophisticated financial system go so wrong and cause so much damage? Brookings Senior Fellows Martin Neil Baily, Douglas W. Elmendorf, and Robert E. Litan collaborated to write a comprehensive analysis of the current credit crisis, which they released at this public forum. The authors explained what happened and put forward a specific agenda of policy actions to reduce the chance that history repeats itself.
Following a brief welcome by Economic Studies Vice President and Director William G. Gale, FDIC Chairman Sheila Bair gave opening remarks on the current challenges facing the financial system and possible policy solutions to alleviate the current crisis. Baily, Elmendorf and Litan gave an overview of their recommendations and were then joined by outside experts in a roundtable discussion. Sebastian Mallaby of the Council on Foreign Relations and the Washington Post moderated the discussion.