1. BY: MICHAEL D. BORDO DEPARTMENT OF ECONOMICS RUTGERS UNIVERSITY

2. OUTLINE 1.Explain Financial Crisis of 2007 – 2008 2.Compare and Contrast Crisis with other past occurrences 3. Combating Future Crises

3. Glass Segal Act Financial Securities Modernization Act Alan GreenspanExtensive BorrowingLink Established

6. Housing Bubble BurstBankruptciesCredit TighteningRecessionCapital Injections from Gov.

7. In the past we have seen: Tightening in Policy Bust & Recession Asset prices Increase Bubbles created because of: From loss of Fundamentals to value assets Financial Innovation Leverage Similarities with Past Economic Crises:

8. What makes this Crisis Unique? Low Capital Ratios Very High Risk Enormous Amounts of Leverage

9. Combating Future Issues: 1.Fed developed series of new programs which would provide liquidity in times of need These would only benefit firms having severe solvency issues and that would have an extremely harmful tole on the economy if they were to fail This is contrasts the previous way of helping firms by Buying Treasury Securities 2. They also plan to act with greater speed in regards to monetary policy decisions. 3.Michael Bordo (author) suggested that they provided excess amounts of liquidity in the market in 2001 – 2004 and that this was also an issue. So do not utilize liquidity measures for to extensive a period

10. Questions?