Friday, October 5, 2007

Systemic Risk -- My Testimony before the House Financial Services Committee

I testified before the House Financial Services Committee on Tuesday in a hearing on "Systemic Risk: Examining Regulators Ability to Respond to Threats to the Financial System". In my written testimony I provided my views on specific questions they had posed in their invitation.

One of the points I made in my testimony was the idea of the government taking on a role as a liquidity provider of last resort. This is something I addressed in my September 10th post, "Bailouts for Profit", and it was also a central point brought up in the testimony of another member of the panel, Professor Steven Schwarcz of Duke University. I had considered this a radical idea, but it was a dominant focus from the members of the committee during the two hours of questions.

4 comments:

  1. The idea was also mulled by Willem Buiter (http://maverecon.blogspot.com/), though his focus is on the UK.

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  2. Was your testimony followed by any intelligent questioning? It seems clear to me that the regulators are falling farther and farther behind the practitioners. As a private investor, I find this very scary, so I'd like to know if there's any reason to think the regulators might be wising up.

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  3. Regarding the level of the questions from the members of congress, the full testimony with the questions and answers is public record; it will be available on line at some point so you will be able to read it and judge for yourself. The congressional staff members that I worked with and those whom I met at the hearing are experienced and very knowledgeable.

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