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Wednesday, January 16th 2019
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Ten Years After the Global Financial Crisis, the System Is Safer

Wednesday, January 16th 2019
06:30 - 08:00 PM EST
The Kaye Playhouse at Hunter College
115 E. 68th Street
New YorkNY

Debate Details

More than 10 years ago, Lehman Brothers collapsed, and the world witnessed one of the worst financial crises in global history. In the United States, the stock market plummeted, unemployment soared, and the economy was thrown into a recession. And many other countries faced a similar fate. Has the world learned its lesson? Some argue that the international framework for handling and responding to a future crisis is lacking. Beyond that, they argue, there is reduced market-making activity, less scope for reduced interest rates, and increased government spending and borrowing. But others are more optimistic, arguing that the past decade was one of recovery and reform, with governments passing regulations to deal with failing institutions and creating oversight infrastructure that shored up the banks. And, they say, there are fewer sketchy loans on the books. Is the global financial system more resilient? Or are we ill-prepared for next time?

 

The Debaters

For the motion

Jason Furman

Jason Furman

Fmr. Chairman, Council of Economic Advisers & Senior Fellow, Peterson Institute

Jason Furman is a nonresident senior fellow at the Peterson Institute for International Economics and was previously the 28th chair of the Council... Read More

Neel Kashkari

Neel Kashkari

President, Federal Reserve Bank of Minneapolis & Fmr. Assistant Secretary, U.S. Treasury Department

Neel Kashkari has been president and chief executive officer of the Federal Reserve Bank of Minneapolis since January, 2016. In this role, he serves... Read More

Against the motion

Kenneth Rogoff

Kenneth Rogoff

American Economist & Professor, Harvard University

Kenneth Rogoff is the Thomas D. Cabot professor of public policy and professor of economics at Harvard University. From 2001 to 2003, he served as... Read More

Gillian Tett

Gillian Tett

U.S. Managing Editor, Financial Times

Gillian Tett is an award-winning journalist, best-selling author, and the U.S. managing editor of the Financial Times, where she oversees global coverage... Read More

Where Do You Stand?

For The Motion
  • Since the Great Recession, the capital position of banks has largely improved. And with reforms like the Dodd-Frank Act, the United States now has ways to identify and hold accountable institutions, improving financial stability and consumer protection.
  • Outside of the U.S., countries have also taken steps to shore up their banking systems: The European Union’s Single Supervisory Mechanism gives the European Central Bank authority to monitor, test, and intervene in financial institutions.
  • While some may be alarmed about increasing debt, others see systemic ways to address it. The institutions that hold debt are more diversified than they were in 2008, and though the deficit in the U.S. is high, some say it doesn’t pose a problem to the global financial system. 
Against The Motion
  • Some argue that the post-financial crisis reforms are heavy-handed and burdensome. And in the wake of another crisis, they say, it narrows the Federal Reserve System’s emergency lending authority and exposes the lending to a higher threshold of scrutiny. 
  • Europe has not done enough to ward off another financial meltdown, and the Single Supervisory Mechanism will not be able to monitor thousands of banks. Further, inter-Europe geopolitical, social, and economic issues – like Italy’s debt crisis – could trigger another financial crisis.
  • Many economists say debt could pose a serious threat to the financial system: U.S. national debt is over $21 trillion, and there are piles of risky corporate debt – totaling $6.3 trillion – which could lead to defaults and another financial crisis.

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The Research

The Research

The global financial crisis 10 years on: six charts that tell the story

David Brett
August 9, 2017

A summary of the global financial crisis.

A decade After Lehman, the Financial System Is Safer. Now We Must Avoid Reform Fatigue

Adolfo Barajas, Claudio Raddatz and James P. Walsh
October 3, 2018

"To be sure, the financial system is safer. Banks have thicker and better capital cushions to absorb losses, and they are now better able to convert assets into cash in times of stress. Countries also use stress tests to check the health of the biggest banks and have set up oversight authorities to monitor risks to the financial system."

The crisis next time

Carmen M. Reinhart and Vincent R. Reinhart
September 13, 2018

"Ten years after the financial crisis, what have we learned? The most disquieting lesson is how complacent politicians, policymakers, and bankers had grown before the crisis and how much they had forgotten about the past. It shouldn’t have taken them as long as it did to relearn what they should have already known."
 

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