Category Archives: Financial Crisis of 2008

Regulatory miscalculation

Two examples. 1. Stephen Matteo Miller writes, While these findings do not establish that the Recourse Rule caused the financial crisis, they are consistent with the view that the rule encouraged securitizing banks, especially the largest ones, to hold the … Continue reading

Posted in Financial Crisis of 2008, links to my essays | 1 Comment

Two Thoughts on William Niskanen

I had only one close encounter with him. That was when he went to a Congressman’s office to argue against TARP and he invited me to join in the meeting. My observations about him: 1. He was highly principled. If … Continue reading

Posted in Financial Crisis of 2008 | 8 Comments

What I’m Reading

Two books that attack conventional economic modeling, especially in light of the financial crisis. I have a preview copy of Economics for Independent Thinkers, by Daniel Nevins. I have a review copy of The End of Theory, by Richard Bookstaber. … Continue reading

Posted in books and book reviews, Financial Crisis of 2008 | Tagged , | 15 Comments

The Source of Systemic Financial Risk

Charles Calomiris says that it is the political system. There are two important systemic threats to financial stability: government policies that subsidize mortgage risk, and government policies that insure bank debts (and, more generally, that subsidize bank default risk through … Continue reading

Posted in Financial Crisis of 2008, Housing and housing finance | 8 Comments

Revisiting My Former Life

Susan Wharton Gates, a former Freddie Mac employee, recently published a book delving into the collapse of that housing finance enterprise. In my review, I write, The fall of Freddie Mac came as a shock to those of us who … Continue reading

Posted in books and book reviews, Financial Crisis of 2008 | 3 Comments

Ben Bernanke takes on Sebastian Mallaby

Bernanke writes, Mallaby’s argument that Greenspan should have known that a tighter monetary policy was appropriate in 2004-2005 (if that was in fact the case!) strains credulity. In 2003 the Fed was navigating a deflation scare and a jobless recovery … Continue reading

Posted in books and book reviews, Financial Crisis of 2008, Tyler Cowen is my Favorite Blogger | 2 Comments

Another Idiosyncratic Comment

Kevin Erdmannn comments, It seems like you’re making the very mistake Smith is warning about. I don’t think historians looking at the newspapers of 2005 would be struck with the high level of trust we had in financial intermediaries. We … Continue reading

Posted in Financial Crisis of 2008 | 3 Comments

Common-law Banks

A commenter asks, What do you think of the limited purpose banking proposal advanced by Laurence Kotlikoff and others? Link to PDF: https://www.aeaweb.org/conference/2012/retrieve.php?pdfid=568 I am skeptical of the ability of government to design banks. It is one thing to write … Continue reading

Posted in Financial Crisis of 2008 | 6 Comments

What Was Glass-Steagall?

I don’t think that Robert Reich actually knows. Some argue Glass-Steagall wouldn’t have prevented the 2008 crisis because the real culprits were non-banks like Lehman Brothers and Bear Stearns. But that’s baloney. These non-banks got their funding from the big … Continue reading

Posted in Financial Crisis of 2008, Tyler Cowen is my Favorite Blogger | 7 Comments

Larry Ball Gets Pushback

From Stephen G. Cecchetti and Kermit L. Schoenholtz: There is certainly room for debate, but we see the question of whether Lehman’s net worth was negligible or sharply negative as ancillary to the real issue. In important ways, lending to … Continue reading

Posted in Financial Crisis of 2008 | 7 Comments