Feature Story
Preventing the Next Market Meltdown
Changing Bankers' Perverse Incentives
In any financial crisis, it is possible with 20/20 hindsight to identify the specific causes. Rather than outlawing those activities, Professor Jonathan Berk recommends designing legislation that better aligns the incentives of bankers with the public interest.
Tame Taste for Risk, Centralize Clearing
Professor Darrell Duffie argues that redesigning the U.S. financial system after the current crisis will focus on creating stability.
Streamline Regulators, Revise Loan Terms
During the past 200 years, there have been 16 credit crises in the United States, all marked by speculative excesses in the years immediately preceding. As the ultimate safeguard to stem a financial panic, the government should have in place the apparatus that will allow it to curtail such excesses in advance of their triggering a financial panic says Finance Professor James C. VanHorne.