Capital Standards, Regulatory Ignorance and the Financial Crisis of 2008

Online registration for this event is now closed. Walk-in registrations will be accepted.

If you cannot attend, we welcome you to watch the event live on this page.

In their new book, “Engineering the Financial Crisis: Systemic Risk and the Failure of Regulation” (University of Pennsylvania Press, 2011), Jeffrey Friedman and Wladimir Kraus argue that the primary cause of the financial crisis of 2008 was minimum capital standards intended to steer banks toward safer investments. Regulators adopted these standards with little understanding of how they related to other rules—especially those requiring mark-to-market accounting and those sanctioning ratings bureaus as the arbiters of investment risk. The result was a dangerous concentration of risky mortgage-backed securities at leading financial institutions. But Friedman and Kraus argue that the ultimate culprit is not a single policy decision, but rather the idea that systemic risk can be managed by the decisions of regulators—whose knowledge of the future is necessarily as limited and partial as the knowledge of those being regulated. In the face of uncertainty, the best protection against catastrophic failures like the collapse of 2008 is to permit multiple competing approaches toward financial risk, rather than imposing any single, uniform approach. At this AEI book forum, Friedman will present his book’s arguments, followed by comments from AEI’s Peter Wallison and Alex Pollock and a general discussion.

Purchase the book here

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Christopher
DeMuth

 

Peter J.
Wallison

 

Alex J.
Pollock

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 27
    MON
  • 28
    TUE
  • 29
    WED
  • 30
    THU
  • 31
    FRI
Monday, October 27, 2014 | 10:00 a.m. – 11:30 a.m.
State income taxes and the Supreme Court: Maryland Comptroller v. Wynne

Please join AEI for a panel discussion exploring these and other questions about this crucial case.

Tuesday, October 28, 2014 | 9:30 a.m. – 12:15 p.m.
For richer, for poorer: How family structures economic success in America

Join Lerman, Wilcox, and a group of distinguished scholars and commentators for the release of Lerman and Wilcox’s report, which examines the relationships among and policy implications of marriage, family structure, and economic success in America.

Tuesday, October 28, 2014 | 5:30 p.m. – 7:00 p.m.
The 7 deadly virtues: 18 conservative writers on why the virtuous life is funny as hell

Please join AEI for a book forum moderated by Last and featuring five of these leading conservative voices. By the time the forum is over, attendees may be on their way to discovering an entirely different — and better — moral universe.

Thursday, October 30, 2014 | 2:00 p.m. – 3:00 p.m.
A nuclear deal with Iran? Weighing the possibilities

Join us, as experts discuss their predictions for whether the United States will strike a nuclear deal with Iran ahead of the November 24 deadline, and the repercussions of the possible outcomes.

Thursday, October 30, 2014 | 5:00 p.m. – 6:15 p.m.
The forgotten depression — 1921: The crash that cured itself

Please join Author James Grant and AEI senior economists for a discussion about Grant's book, "The Forgotten Depression: 1921: The Crash That Cured Itself" (Simon & Schuster, 2014).

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.