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UNC Law Professors Analyze the Financial Crisis

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As we all look for a remedy to the current financial crisis, North Carolina residents had an opportunity to ask their own questions and examine the issues in a public forum on Thursday, Oct. 23, in Chapel Hill. Among the eight panelists were three law professors: Lissa Broome, Tom Hazen and Don Hornstein. The "Think Fast" forum was sponsored by the UNC General Alumni Association and organized by the Center for Banking and Finance.

"Financial Crisis: Issues and Options" was held at the George Watts Hill Alumni Center on the UNC campus, and it brought together prominent experts in capital markets, insurance, federal regulation of banks, securities and derivatives, monetary and economic policy to discuss their views on the implications of recent events in the financial world.

Janet Babin, Marketplace Innovations desk reporter for American Public Media, served as moderator for our panel of faculty from the School of Law, Kenan-Flagler Business School and the Department of Economics. Panelists included:

  • Stanley W. Black, Lurcy Distinguished Professor, Department of Economics
    "The effect on the real economy and how to improve the situation"
  • Lissa Broome, Wachovia Professor of Banking Law and Director of the Center for Banking and Finance
    "The bank perspective, including FDIC insurance coverage"
  • Jennifer Conrad, Dalton McMichael Distinguished Professor of Finance, Kenan-Flagler Business School
    "What precipitated the financial crisis? "
  • Richard Froyen, professor, Department of Economics
    "Federal Reserve Bank response"
  • Tom Hazen, Cary C. Boshamer Distinguished Professor of law, School of Law
    "Regulation, or lack thereof, of credit default swaps"
  • Don Hornstein, Aubrey L. Brooks Professor of Law, School of Law
    "Insurance, roles of agencies in regulation"
  • Christian Lundblad, Edward M. O'Herron Distinguished Scholar and Associate Professor of Finance, Kenan-Flagler Business School
    "Investment strategies during challenging times"
  • Eugene Flood, president and CEO of Smith Breeden Associates, Inc.
    Industry perspective

The panel's remarks followed by Q & A are available in the following formats:

You may also listen to video in the order in which UNC faculty and industry experts spoke during the forum. Notes are available for some sections.

  • Part 1: What caused the crisis (16:17; slides 1 through 13)-Brief introduction by moderator, Janet Babin Marketplace Innovations desk reporter for American Public Media-Christian Lundblad, Edward M. O'Herron Distinguished Scholar, Associate Professor of Finance, Kenan-Flagler Business School-Jennifer Conrad, Dalton McMichael Distinguished Professor of Finance, Kenan-Flagler Business School
  • Part 2: The role of banks, FDIC insurance, what a credit default swap is and the role it played (17:40; slides 14 through 20) - Lissa Broome, Wachovia Professor of Banking Law, School of Law; Director, Center for Banking and Finance - Tom Hazen, Cary C. Boshamer Distinguished Professor of Law, School of Law
  • Part 3: (Not yet available; to be posted shortly) The role of agencies in regulation and Federal Reserve Bank response-Don Hornstein, Aubrey L. Brooks Professor of Law, School of Law-Richard Froyen, Professor, Department of Economics
  • Part 4: The effect on the economy and how to improve the situation (11:21; slides 22 through 26)Stanley W. Black, Lurcy Distinguished Professor, Department of Economics
  • Part 5: The industry perspective - the driving issues of fear, leveraging and the economic cycle and the role of policy (19:56) Eugene Flood, President and CEO of Smith Breeden Associates, Inc
  • Part 6: Q & A, Part A (16:10; questions submitted by the audience)
    1. What do you see as the impact of Fannie Mae and Freddie Mac through the crisis?
    2. Can you speak to the effect of mark-to-market accounting and its impact on the crisis? (starts at 5:35)
    3. What if anything could the federal government have done to prevent or at least ameliorate this crisis? (starts at 9:05)
    4. For so long we've talked about economics in terms of John Maynard Keynes or Milton Friedman. Are we ready for a new economic theory that considers and models markets in nonlinear ways and takes into account their complexity? (starts at 13:10)
  • Part 7: Q & A, Part B (11:59; questions submitted by the audience)
    1. How do you cope with inflation if the government bails the economy out?
    2. Are banks issuing new stocks to the government or moving stocks around; what are the effects on shares? (starts at 5:45)
    3. Has anybody made money on the credit default swaps? (starts at 6:30)
    4. What advice do you have for individual investors to weather the storm? (starts at 7:00; slides 28 and 29)
    5. What is it like to receive a margin call and what does an investment firm do? (starts at 9:15)

This program was part of the "Think Fast" series, which the UNC General Alumni Association occasionally conducts to provide timely forums on breaking news stories that dominate public discussion.

-November 17, 2008

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