Monday, February 9, 2009

Repairing a failed system

By Viral Acharya and Matthew Richardson in Vox:

As cracks in the financial system began to appear in early 2007, some of us at the NYU Stern School of Business began to vigorously debate all the issues. Some, like our colleague, Nouriel Roubini, had been forecasting trouble for a number of years. Living in the New York City and being at a major business school at the heart of the financial capital of the world, it was difficult not to become immersed in the events of the past two years.

When the securitisation market collapsed in the summer of 2007, and realisations of subprime losses began to show on bank’s balance sheets, one thing became clear for many of us – this would be a unique period in financial history. In the Fall of 2007, we put on monthly events related to the subprime crisis. One such event in November 2007 drew 750 undergraduate and MBA students. It was a presciently pessimistic discussion. So a year later, when the financial system spiraled downward we decided, like many academics, to put pen to paper and write a series of white papers on various aspects of the crisis.

A holistic view of the financial crisis

After numerous meetings, and as the material developed, we realised that we had taken a holistic view of the financial crisis. Common themes began to emerge. The resulting effort led to the book, “Restoring Financial Stability: How to Repair a Failed System”, forthcoming this March by John Wiley & Sons.

For a summary go here.

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