Spring 2012

Spring 2012

Seminars this spring will focus on financial regulation and benefit-cost analysis

Thursday, February 23
11:45am-1:00pm, Bell Hall
Reviving Regulatory Reform
Christopher DeMuth, Distinguished Fellow, Hudson Institute
Abstract:The regulatory reform movement, which ran approximately from 1975 through 1985, was intellectually robust and philosophically broad-based, and it achieved significant victories in practical politics. The policy landscape looks very different today. Federal regulation has been growing dramatically (even price controls are making a comeback), and the political debates appear highly partisan. But in fact the recent growth of regulation has been bipartisan (it was at least as pronounced under George W. Bush as it has been under Barack Obama). This lecture will diagnose the causes of regulatory growth and evaluate the leading reform proposals currently being considered. It will compare today’s central policy issues with those than animated the old regulatory reform movement, and argue that the earlier era produced important insights that could usefully be applied today.
Bio: Christopher DeMuth was a lecturer at the Kennedy School and director of the Harvard Faculty Project on Regulation in 1976–1981. He was thereafter administrator of the Office of Information and Regulatory Affairs in the Office of Management and Budget (the position currently held by Cass Sunstein of the Harvard Law School) in 1981–1984. He was president of the American Enterprise Institute for Public Policy Research in 1986–2008 and is currently a distinguished fellow at the Hudson Institute. His papers on regulation and other subjects are posted at www.christopherdemuth.com.
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Thursday, March 1
11:45am-1:00pm, Bell Hall
Regulating the Shadow Banking System
Andrew Metrick, Michael H. Jordan Professor of Finance and Management, Yale School of Management
Paper: Regulating the Shadow Banking System by Gary Gorton and Andrew Metrick
Abstract: The “shadow” banking system played a major role in the financial crisis, but was not a central focus of the recent Dodd-Frank Law and thus remains largely unregulated. This paper proposes principles for the regulation of shadow banking and describes a specific proposal to implement those principles.
Bio: Andrew Metrick joined the Yale School of Management in 2008 as a Professor of Finance. He previously held faculty positions in the finance department at Wharton and the economics department at Harvard. In 2009-2010, he was on leave from Yale working for the Council of Economic Advisers in Washington. Professor Metrick’s current research and teaching is focused on financial stability, including the regulation of systemic risk, the activities of complex financial institutions, and the causes and consequences of the financial crisis of 2007-9. His past work has been in financial intermediation more generally, with a focus on investment management and corporate governance.
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Thursday, March 8
11:45am-1:00pm, Bell Hall
Regulation, Unemployment, and Cost-Benefit Analysis
Eric Posner, Kirkland & Ellis Professor of Law, University of Chicago
Paper: Regulation, Unemployment, and Cost-Benefit Analysis by Jonathan S. Masur and Eric A. Posner
Abstract:Regulatory agencies take account of the potential unemployment effects of proposed regulations in an ad hoc, theoretically incorrect way. Current practice is to conduct job-loss or feasibility analysis, under which the agency predicts the unemployment effects of a proposed regulation, and then declines to regulate (or weakens the proposed regulation) if the unemployment effects exceed an unarticulated threshold. Agencies do not reveal the threshold, do not explain why certain unemployment effects are excessive, and do not explain how they compare unemployment effects and the net benefits of the regulation. Many agencies also predict unemployment effects incorrectly. The proper approach is for agencies to incorporate unemployment effects into cost-benefit analysis by predicting the amount of unemployment that a regulation will cause and monetizing that amount. Recent economic studies suggest that monetized cost of unemployment is significant, possibly more than $100,000 per worker. If agencies used this figure, there could be significant consequences for a wide variety of regulations.
Bio: Eric Posner is Kirkland and Ellis Professor of Law, University of Chicago. He writes about contract law, international law, constitutional law, and administrative law. His books include Economic Foundations of International Law (with Alan Sykes) (Harvard, forthcoming); Contract Law and Theory (Aspen, 2011); The Executive Unbound: After the Madisonian Republic (with Adrian Vermeule) (Oxford, 2011); Climate Change Justice (with David Weisbach) (Princeton, 2010); The Perils of Global Legalism (Chicago, 2009); Terror in the Balance: Security, Liberty and the Courts (with Adrian Vermeule) (Oxford, 2007); New Foundations of Cost-Benefit Analysis (with Matthew Adler) (Harvard, 2006); The Limits of International Law (with Jack Goldsmith) (Oxford, 2005); Law and Social Norms (Harvard, 2000); Chicago Lectures in Law and Economics (editor) (Foundation, 2000); Cost-Benefit Analysis: Legal, Economic, and Philosophical Perspectives (editor, with Matthew Adler) (University of Chicago, 2001). He is a fellow of the American Academy of Arts and Sciences.
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Tuesday, March 20 (Please note different day of the week and location)
11:45am-1:00pm, Nye A, 5th Floor, Taubman Building
Stressed Out: Macroprudential Principles for Stress Testing
Anil Kashyap, Edward Eagle Brown Professor of Economics and Finance,
University of Chicago Booth School of Business
Paper: Stressed Out: Macroprudential Principles for Stress Testing by David Greenlaw, Anil K. Kashyap, Kermit Schoenholtz, and Hyun Song Shin
Bio: Anil K Kashyap is the Edward Eagle Brown Professor of Economics and Finance at the University of Chicago Booth School of Business. His research focuses on banking, business cycles, financial regulation, and monetary policy. His research has won him numerous awards, including a Sloan Research Fellowship, the Nikkei Prize for Excellent Books in Economic Sciences, and a Senior Houblon-Norman Fellowship from the Bank of England.
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Thursday, April 5
11:45am-1:00pm, Bell Hall
On the Quality of Economic Analysis at Independent Financial Regulatory Agencies
Randall Lutter, Visiting Scholar, Resources for the Future
Paper: On the Economic Analysis of Regulations at Independent Regulatory Commissions by Arthur Fraas and Randall Lutter
Bio: Randall Lutter joined RFF in 2010 after more than 20 years of senior experience in the management and evaluation of programs regulating health, safety and environmental risks, having served in three different federal agencies for four presidents, including service as the chief economist and deputy commissioner for policy at the U.S. Food and Drug Administration. His current research interests include the quality of economic analysis of regulations, efficient air pollution regulation in the presence of non-convexities and uncertainty, and the performance of government agencies responding to outbreaks of foodborne illness.
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Thursday, April 12
11:45am-1:00pm, Bell Hall
Financial Regulatory Reform: Innovation in Regulatory Design and Implementation
Diana Farrell, Director, McKinsey Center for Government
Abstract:Following the financial crisis and the ensuing Great Recession, revamping the financial regulatory regime (within political realities) was an imperative. The Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA), designed by the Administration and passed in July of 2010, was one of President Obama's signature legislative successes. In this session, we will explore the context for framing financial regulation, approaches to and discussions of critical tradeoffs in modernizing oversight of the system, new regulatory tools and challenges facing regulators in implementation.
Bio: Diana Farrell has rejoined McKinsey & Company as a Director after holding the post of Deputy Director of the National Economic Council and Deputy Assistant to the President on Economic Policy at the White House. Among other leadership responsibilities across the Firm’s public and private sector practices, she will lead the newly formed McKinsey Center for Government.
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> Watch the video of this seminar.