“The 2008 Financial Crisis: Causes, Consequences and Policy Reactions”
A Forum hosted by the UAlbany Finance Department, Economics Department and Center for Institutional Investment Management
Real Player Video of the Event (1h. 49 minutes)
Acrobat .pdf presentations:
Presentation #1: Overview by Prof. Faugere
Presentation #2: The Crisis and the Banking Sector by Tim Bruculere
Presentation #3: The Link with 1929 by Prof. Dieffenbach
The Forum on “The 2008 Financial Crisis: Causes, Consequences and Policy Responses” held at the University at Albany on October 27, 2008 was enthusiastically received by the Capital District. The University welcomed more than 350 students, faculty, business executives and local residents who were eager to ask questions about the financial crisis and its ramifications for the future of New York State and the national economy.
The forum was introduced by Provost Phillips who emphasized the timeliness of this event and the importance for UAlbany to serve our community in all educational aspects. The event was moderated by Michael Jerison, Chair of the Economics Department. The first part of the event consisted of four short presentations: two by UAlbany academics, one from a banking industry expert, and the last from a head researcher at the NY State Division of Budget. The second half of the program included a panel discussion and a Q&A session with audience participation.
Professor Faugere of the Finance Department started out by highlighting some of the main causes of the crisis. He described some of the financial instruments that were misused and ended up causing so many problems for the financial sector.
Tim Bruculere, VP of Loan Participation for Members United Corporation Federal Credit Union, analyzed the situation from the standpoint of small to average size banks. He pointed out how the rescue plan from the government does not really help the small to average size banking industry. Tim discussed the motivation of banks to hoard cash, but also recognized that many smaller banks have very healthy balance sheets with sufficient cash on hand. He commented that the market for student loans is being deserted by the usual lending houses, but new players coming to the market may present an encouraging forecast.
Professor Bruce Dieffenbach from Economics gave a historical perspective of the financial crisis, starting with describing the seven stages of a financial crisis as analyzed by late economist Charles Kindleberger. Bruce identified similarities between the 1929 market crash and the current crisis, especially the destructive use of leverage. He gave insightful examples including a description of the way William Durant was ruined in the 1930s. The presentations wrapped up with a look at the New York State economy by Qiang Xu, Head of Research for the New York State Division of the Budget. Qiang presented several forecasting scenarios of budget shortfalls and discussed ways the real New York State economy would be affected under these scenarios.
The program then launched into a spirited discussion led by eight experts in the financial sector and the audience was encouraged to pose questions and concerns. Peter Cosgrove, Sr. VP at First Niagara Bank, commented on several aspects of the bailout plan. Kenneth Leonard, VP at Sanford Family Financial of Wachovia Securities, emphasized the need to reconstitute a form of the Glass-Steagall 1933 Act.
Shawky talked about the impact of credit default
swaps on the crisis and how other credit markets (consumer credit cards) did
not appear to be in danger. Tim Bruculere provided
feedback on the credit crunch, and Professor Dieffenbach
described several real-world examples of families that would not be helped by
the rescue plan given what would happen to the value of their homes. Katharine
Doran of Teal Becker and Chiaramonte CPAs explained
how “mark-to-market” works, and commented on the recent
After the event, several students and business community members expressed appreciation for this opportunity to hear personal perspectives from local experts on the financial crisis. During such restless times, it is important to ease some of the anxiety and come together to share knowledge.
Photos by Jianbo (Robert) Tian.