Summary of Reforming U.S. Financial Markets

Looking for the book?
We have the summary! Get the key insights in just 10 minutes.

Reforming U.S. Financial Markets book summary
Start getting smarter:
or see our plans

Rating

7

Qualities

  • Comprehensive
  • Analytical
  • Innovative

Recommendation

When the US’s top economists meet at a symposium on remaking America’s financial system, they’re bound to disagree. But in Randall S. Kroszner and Robert J. Shiller’s new book – a brief collection of the papers they presented at Harvard University, along with comments by their equally esteemed colleagues – their divergence lies more in their methods than in their main conclusion: The US financial sector desperately needs a makeover. getAbstract recommends their cogent, well-thought-out reasoning on the causes of the recent financial crisis.

About the Authors

Randall S. Kroszner is an economics professor at the University of Chicago and a former governor of the Federal Reserve System. Robert J. Shiller is an economics professor at Yale, the author of Irrational Exuberance and the co-author of Animal Spirits.

 

Summary

Crisis and Its Aftermath

The 2007-2008 financial crisis affected most of the world’s economies, but global financial institutions and the financial sector felt the brunt. The modern-day panic was the worst calamity to hit the finance industry since the 1930s’ Great Depression. The perfect storm that began to unfold in 2007 featured banks trading securities at a turbo-charged rate, applying ever-increasing leverage to augment earnings and selling into a speculative market fueled by derivatives.

In 2010, in an attempt to address the root causes of the crisis and to legislate measures to prevent a recurrence, the US government enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Dodd-Frank’s main components are:

  • “A new Financial Stability Oversight Council” – This new entity, though made up of existing regulatory agencies, monitors potential threats to the economy.
  • “Reallocation of banking oversight responsibility” – The Federal Reserve Bank now supervises nonbank financial organizations.
  • “Authority for regulators” – Regulators may compel certain “systemically important” firms to raise more capital...

More on this topic

Customers who read this summary also read

The Financial Crisis and the Free Market Cure
7
Why Wall Street Matters
7
Lying for Money
8
Too Smart for Our Own Good
8
Cracking the Emerging Markets Enigma
7
Dark Towers
8

Related Channels

Comment on this summary