Economic History Commons^™

Lessons Learned: Zachary Taylor, Maryann Haggerty

Journal of Financial Crises

Zachary Taylor joined the Federal Reserve Bank of New York (FRBNY) in January 2009 to lead the team responsible for managing and unwinding the central bank’s Maiden Lane II and III portfolios, which were acquired in connection with the intervention to assist American International Group (AIG). Taylor later took over responsibility for the Maiden Lane portfolio consisting of former Bear Stearns assets as well as the unwinding of the Term Asset-Backed Securities Loan Facility (TALF), another crisis-era program. All told, those portfolios amounted to more than $140 billion in residential mortgage-backed securities (RMBS), collateralized debt obligations (CDO), credit default …

Lessons Learned: Robert Hoyt, Esq., Yasemin Esmen

Journal of Financial Crises

Robert Hoyt was General Counsel at the U.S. Department of Treasury between 2006 and 2009. He oversaw legal aspects of policies implemented to manage the crisis, including the rescues of Bear Stearns, AIG, and the U.S. Auto industry, the conservatorship of Fannie Mae and Freddie Mac, and the failure of Lehman Brothers, as well as the creation and implementation of the Troubled Asset Relief Program (TARP.) This Lessons Learned is based on a phone interview with Mr. Hoyt.

Lessons Learned: Alejandro Latorre, Maryann Haggerty

Journal of Financial Crises

At the time of the 2007-09 global financial crisis, Alejandro Latorre was an assistant vice president at the Federal Reserve Bank of New York (FRBNY). He was active in the bailout of American International Group (AIG) from its inception to the end, when AIG repaid its outstanding obligations to both the Federal Reserve and the U.S. Treasury. This Lessons Learned summary is based on a Feb. 26, 2020, interview. He emphasized that the views discussed here are his own, not the views of anyone else currently or previously within the Federal Reserve System or the views of his current employer.

Lessons Learned: Sarah Dahlgren, Alec Buchholtz, Rosalind Z. Wiggins

Journal of Financial Crises

Sarah Dahlgren was the Executive Vice President and head of the Financial Institution Supervision Group at the Federal Reserve Bank of New York (FRBNY) during the crisis and instrumental in the rescue of American International Group (AIG). This Lessons Learned summary is drawn from a March 22, 2018, interview in which she gave her take on how central bankers can prepare for future crises.

Lessons Learned: Chester B. Feldberg, Maryann Haggerty

Journal of Financial Crises

Chester B. Feldberg worked for the Federal Reserve Bank of New York (FRBNY) for 36 years in a variety of roles. In the aftermath of the Global Financial Crisis, he served as a trustee for the AIG Credit Trust Facility (2009-2011). The trust was established in early 2009 to hold the equity stock of American International Group Inc. (AIG) that the U.S. government had received as a result of the 2008 AIG bailout. The three trustees were responsible for voting the stock, ensuring satisfactory corporate governance at AIG, and eventually disposing of the stock.

When he was named as a …

The Rescue Of Fannie Mae And Freddie Mac – Module Z: Overview, Rosalind Z. Wiggins, Ben Henken, Adam Kulam, Daniel Thompson, Andrew Metrick

Journal of Financial Crises

In September 2008, as the financial crisis that had begun the previous year escalated, the US government appointed a conservator for two government-sponsored enterprises (GSEs), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), that dominated the secondary mortgage market and were among the largest participants in the global capital markets. The conservatorships were the hallmark of a multipart rescue plan intended to save the firms from insolvency and a disorderly collapse and required the combined and coordinated efforts of several government agencies and instrumentalities. Ultimately, the government invested $191.5 billion into the …

The Rescue Of Fannie Mae And Freddie Mac–Module F: Federal Reserve’S Large-Scale Asset Purchase (Lsap) Program, Daniel Thompson, Adam Kulam

Journal of Financial Crises

By late 2008, the secondary mortgage markets were suffering high default rates, causing mortgage lending to slow and the value of mortgage securities to plummet. The Federal Reserve lowered the federal funds rate, and the government placed Fannie Mae and Freddie Mac into conservatorship, yet credit in housing and other financial markets remained tight. On November 25, the Fed announced its intent to purchase up to $500 billion in agency mortgage-backed securities (MBS) and $100 billion in agency debt to reduce the cost and increase the availability of mortgage credit, which would support housing markets and improve conditions in financial …

The Rescue Of Fannie Mae And Freddie Mac – Module E: The Housing And Economic Recovery Act Of 2008, Daniel Thompson

Journal of Financial Crises

As the U.S. housing crisis worsened in 2007, and through 2008, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) headed towards insolvency. At the same time, contractions in private securitization resulted in these two government-sponsored enterprises (GSEs) purchasing nearly half of all new mortgages. In July, the government passed the Housing and Economic Recovery Act of 2008 (HERA) to provide a more effective regulator and to address public uncertainty regarding whether the government would back the GSEs’ assets and liabilities. HERA provided Treasury and the newly formed Federal Housing Finance Agency (FHFA) …

The Rescue Of Fannie Mae And Freddie Mac – Module D: Treasury’S Gse Mbs Purchase Program, Michael Zanger-Tishler, Rosalind Z. Wiggins

Journal of Financial Crises

As the housing crisis escalated during the second half of 2007, two government-sponsored enterprises (GSEs), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), occupied an increasingly central role in the secondary mortgage market, purchasing a greater percentage of new mortgages as private securitization rapidly contracted. As their importance in this market grew, the two GSEs also began to suffer billion-dollar losses, inciting concerns that they might not be able to stay solvent throughout the remainder of the crisis. On September 6, 2008, fearing the systemic consequences of the two firms’ failures, the …

The Rescue Of Fannie Mae And Freddie Mac – Module C: Gse Credit Facility, Emily Vergara

Journal of Financial Crises

In 2007 and 2008, the collapse of the subprime mortgage market and the deterioration of the housing market more generally precipitated a crisis at the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), which together held or guaranteed $5.3 trillion in mortgage assets. Over the course of two years, both entities suffered high losses and saw their liquidity positions deteriorate as the market perceived their rapid decline. On September 6, 2008, the Federal Housing Finance Agency (FHFA), pursuant to the authority of the Housing and Economic Recovery Act (HERA) of 2008, took Fannie …

The Rescue Of American International Group Module Z: Overview, Rosalind Z. Wiggins, Aidan Lawson, Steven Kelly, Lily S. Engbith, Andrew Metrick

Journal of Financial Crises

In September 2008, in the midst of the broader financial crisis, the Federal Reserve Board of Governors used its emergency authority under Section 13(3) of the Federal Reserve Act to authorize the largest loan in its history, a $85 billion collateralized credit line to American International Group (AIG), a $1 trillion insurance and financial company that was experiencing severe liquidity strains. In connection with the loan, the government received an equity interest representing 79.9% of the company’s ownership. AIG continued to experience a depressed stock price, asset devaluations, and the risk of ratings downgrades leading to questions about its solvency. …

The Rescue Of American International Group Module D: Maiden Lane Ii, Lily S. Engbith, Devyn Jeffereis

Journal of Financial Crises

In September 2008, American International Group (AIG) faced increasing difficulty in returning cash collateral to counterparties looking to terminate, rather than roll over, their securities lending agreements, in part because the company had invested the collateral in residential mortgage-backed securities (RMBS), which were becoming illiquid. The Federal Reserve Bank of New York (FRBNY) provided liquidity to the company, including through the Securities Borrowing Facility (SBF), which allowed for the repayment of cash collateral but did not address the falling values of the RMBS. In November 2008, the Federal Reserve Board authorized the creation of Maiden Lane II (ML II), a …

The Rescue Of American International Group Module C: Aig Investment Program, Alec Buchholtz, Aidan Lawson

Journal of Financial Crises

In September 2008, the Federal Reserve Bank of New York (FRBNY) extended an $85 billion credit line to AIG to address its liquidity stresses, but AIG’s balance sheet remained under pressure. The insurance giant was projected to report large third-quarter losses and was at risk of being downgraded by major credit rating agencies. For these reasons, in early November 2008, the US Treasury invested $40 billion of Troubled Assets Relief Program (TARP) funds into AIG in exchange for 4 million shares of AIG Series D preferred stock and a warrant to purchase AIG common stock. The investment helped repay a …

Stress Tests And Policy, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

Ten years after the Federal Reserve’s crisis-era bank stress test, it is time to recalibrate the stress tests for “peacetime.” Outside of a crisis, supervisors should tailor stress tests to focus on their comparative advantages by taking a macroprudential focus, with severe scenarios that enable them to learn about emerging risks in both traditional and shadow banking sectors. In peacetime, also, supervisors should emphasize risk- management practices and be wary of forcing rapid changes in capital levels for individual banks, while linking stress-test results with countercyclical capital buffers across the system.

Monetary And Fiscal Policies In The Covid-19 Crisis. Will They Work?, Daniel Lacalle

Journal of New Finance

The spread and mortality rate of the COVID-19 virus has created enormous strains on global healthcare systems and driven governments to take extreme measures to contain the virus, including the lock down of most citizens and shutting down most economic sectors. Due to these unique challenges and coming from an economy that was weak already in 2018 and 2019, the world faces a global crisis of unprecedented impact and high uncertainty about the recovery process. In this paper, we analyze how the world economy is addressing the COVID-19 pandemic. We start with the situation of the main economic regions at …

الرساميل الأجنبية وتأثيرها على الاقتصاد المغربي, سهام علوي بلغيتي

Dirassat

Title : The impact of Foreign capital on the Moroccan economy

The Protection Treaty was a legal pretext for France to supervise Morocco. However, the reality of protection culminated in exclusive control and domination of the economic sector. Businessmen and settlers benefited largely from the wealth of the region without restrictions. Moroccans who were involved with the imperialist economic logic seized the opportunity regardless of the economic logic dictated by Islam. Thus, the socio-economic, political and cultural repercussions of French economic policy on the Moroccan economy were huge. The colonial order dismantled traditional economic patterns that existed long before, therefore, …

Working Paper No. 51, On Dugger And Corporate Hegemony, Daniela M. Ávila Arévalo

Working Papers in Economics

This inquiry seeks to establish that in his writings, William Dugger offers insights into the phenomenon of subreption in his effort to clarify the emergence of corporate hegemony. Focusing upon the changing organizational structure taking place within U.S. corporations, especially in the second half of the 20th century, Dugger emphasizes how the corporation’s rise to dominance diminishes the influences from other institutions—thereby undermining pluralism. Corporate hegemony emerges through invaluation processes that Dugger identifies, resulting in the positioning of the corporation as the dominant institution in economy and society. Through processes associated with subreption there takes place the internalization of corporate …

Enslaved Financing Of Southern Industry: The Nesbitt Manufacturing Company Of South Carolina, 1836–1850, Sharon Ann Murphy

Economics Faculty Publications

Incorporated on the eve of the Panic of 1837, the Nesbitt Manufacturing Company of South Carolina owned and hired enslaved individuals to labor in their ironworks, but they also leveraged the market value of this enslaved property by exchanging them for shares of company stock and offering them as collateral in loan contracts. These slaveholders actively experimented with increasingly sophisticated financial tools and institutions in order to facilitate investment, market exchange, and profit maximization within the system of enslavement. Although historians have examined the role of enslaved labor in industrial concerns, they have largely ignored their role in the financing …

Lessons Learned: Ron Borzekowski, Mercedes Cardona, Rosalind Z. Wiggins

Journal of Financial Crises

Ron Borzekowski was a senior economist at the Federal Reserve Board when he was detailed to join the Financial Crisis Inquiry Commission (FCIC) as a senior researcher and later became deputy to research director Greg Feldberg. The 10-member bipartisan commission, charged with investigating and determining the causes of the crisis, held more than 19 hearings, and interviewed more than 700 people from September 2009 to Jan. 2011. It issued a 662-page report explaining why the crisis came about and the roles of financial institutions, government, and the public. This Lessons Learned is based on an interview with Mr.Borzekowski.

Lessons Learned: Greg Feldberg, Sandra Ward, Rosalind Z. Wiggins

Journal of Financial Crises

Greg Feldberg was a senior supervisory financial analyst at the Board of Governors of the Federal Reserve experienced in regulating large banks when he was recruited to the Financial Crisis Inquiry Commission (FCIC) where he worked from 2010-11, becoming its Director of Research. The FCIC was a bipartisan commission charged with investigating the causes of the global financial crisis of 2007-09. Feldberg shared thoughts about some of the challenges faced by the commission and why its report is important. This "Lessons Learned" is based on an interview with Mr. Feldberg.

Lessons Learned: Christopher Seefer, Mercedes Cardona

Journal of Financial Crises

Christopher Seefer was recruited to the Financial Crisis Inquiry Commission (FCIC) to serve as the commission’s director of investigations. The 10-member bipartisan commission wascharged with investigating and determining the cause of the global financial crisis of 2007-09 (GFC). The commission held over 19 hearings and interviewed more than 700 people from September 2010 to January 2011 and produced a662-page report that attempted to explain why the crisis came about and the roles of government and private enterprises in the crisis.This “Lessons Learned” is based on an interview with Mr. Seefer.

Lessons Learned: Gary Cohen, Sandra Ward

Journal of Financial Crises

Gary Cohen joined the Financial Crisis Inquiry Commission (FCIC) in December 2009 to serve as its general counsel at the request of commission chairman Phil Angelides. The FCIC was a 10-member bipartisan group convened by Congress to investigate the causes of the global financial crisis of 2007-09. Cohen had a wide-ranging and ad hoc position that included advising commissioners and staffers on administrative matters and protocols. In addition, he assisted in document requests and compelling witnesses to testify and, on occasion, in conducting interviews and public hearings. He played an instrumental role in editing the commission’s final report. This “Lessons …

Lessons Learned: Wendy Edelberg, Sandra Ward

Journal of Financial Crises

Wendy Edelberg served initially as Director of Research at the Financial Crisis Inquiry Commission (FCIC) before eventually being named Executive Director. Established in the wake of the global financial crisis of 2007-09, the FCIC was a bipartisan panel of six Democrats and four Republicans charged with determining the causes of the worst financial crisis since the Great Depression. Edelberg built the organization from the ground up, hiring staff, instituting operating procedures, establishing guidelines, managing communications, and reporting to the commissioners. This "Lesson Learned" is based on an interview with Ms. Edelberg.

Lessons Learned: Phil Angelides, Sandra Ward

Journal of Financial Crises

Phil Angelides chaired the Financial Crisis Inquiry Commission (FCIC) established by Congress in the aftermath of the global financial crisis of 2007-09 with the purpose of understanding what precipitated the crisis so that any future crises might be averted. The 10-member bipartisan commission, known as the “Angelides Commission” after its chair, convened in September 2010. Meeting in a span of 15 months and holding 19 public hearings and interviewing more than 700 people, the commission submitted its findings in January 2011. The commission concluded that the crisis was avoidable, the “result of human actions, inactions, and misjudgments.” The report included …

U.S. International Trade And National Security In The Trump Era: Mercantilism, Liberalism, Or Economic Nationalism?, Brett D. Barkey

Electronic Theses and Dissertations

This study will explore the Trump administration’s views of national security as expressed through its international trade policy and ask whether the U.S. is now a mercantilist, a liberal, or an economically nationalist nation. This study will define mercantilism, liberalism and economic nationalism turning for assistance to the writings of Alexander Hamilton, Adam Smith, and Friedrich List.

The study will then explore how those concepts may have been revealed in America’s international trade policy as the U.S. navigated the economic and national security events of the 20th century, and on to 2016 as President-elect Trump prepared to take office. Next …

Competition In Economic Theory And The Skew In U.S. Corporate Wealth Creation, Marc H. Pentacoff

Electronic Theses and Dissertations

Historical studies of U.S. capital markets show a dramatic skew in the distribution of corporate wealth. This thesis investigates the evolution of economic thought related to realistic models of competition, seeking to find the most suitable theory of competition to explain this skew in U.S. corporate wealth creation. The incorporation of realistic elements into the static theories of competition leads to theoretical difficulties in the early 20th century. Another line of thought developed non-equilibrium dynamic models of competition, culminating in Schumpeter. In Schumpeter, firms seek to manage the uncertainty f rom rapid change induced by innovation and increasing returns by …

The Great Consensus After The Great Recession: The Case Of Jamaica, Anthony N. Iacovelli

Electronic Theses and Dissertations

The purpose of this research was to determine the efficacy of the International Monetary Fund’s Stabilization Program (IMFSP) as a tool for economic development. The Fund’s program utilizes an approach steeped in the Washington Conesus, which requires austere and demand side economic measures to be taken to achieve success. To determine efficacy, Jamaica was used as a case study, where special attention paid to the supply side economic consideration of human capital development in Health and Education. Additionally, this paper contrasted the IMF approach with a case study of Singapore and the Developmentalist approach to economic development. The research provided …

Plantation Economy Model As Developed By Lloyd Best And Kari Polanyi Levitt: The Case Of Jamaica, Paula-Leone Samuda

Electronic Theses and Dissertations

Lloyd Best and Kari Polanyi Levitt created the Theory of the Plantation Economy as an analytical tool for understanding the causes of underdevelopment in the Caribbean region. The theory provides a break from the classical understanding of developing economies as simply pre-industrialized societies. Instead, the theory tracks uneven development through analysis of metropole-hinterland relations, which account for the legacy of slavery, colonialism, and mercantilism on the structure of the global economy. In doing so, Plantation Theory is able to draw a clear link between underdevelopment in the hinterland and development in the metropole. Examining the usefulness of the Theory of …

We All Want To Change The World: How Behavioral Insights Can Help Reduce Carbon Emissions, Thomas C. Gifford

Electronic Theses and Dissertations

The world is in the midst of an unprecedented environmental crisis driven primarily by human behavior. As the world has globalized, countries have developed, and standards of living have improved, global pollution has skyrocketed and has resulted in a wide range of environmentally destructive outcomes. All paths to environmentally sustainable development involve a dramatic cut in carbon emissions from current day levels. In this thesis, I explore how the omission of behavioral factors from mainstream neoclassical models has contributed to, and can aid in reducing unsustainably high levels of carbon emissions. Throughout the history of economic thought, classical economists such …

Ethnicity And Education: College Attendance Patterns Among Early 20th-Century Maine's Immigrant Community, Jacob M. Nash

Honors Theses

I examine the college attendance patterns of second-generation Russian-Jewish immigrants in Maine in the early 20^th century relative to other ethnic groups using individual-level Census records. I employ the Abramitzky, Boustan, and Eriksson (ABE) algorithm to track second-generation Jewish, Italian, French Canadian, English Canadian and European immigrants from the 1910 Census to the 1940 Census. My logistic regression analysis indicates that second-generation Jewish immigrants in Maine attended college at significantly higher rates than their peers of similar background in every other ethnic group. While I cannot evaluate them, I also discuss potential explanations for the disparity in college attendance …