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Fixing Finance

Origins of the Financial Crisis and Requirements for Reform

On October 13, 2009, Adrian Blundell-Wignall discussed the origins of the financial crisis and requirements for reform at the New America Foundation, as part of the OECD Breakfast Series. Blundell-Wignall, Deputy Director for Financial and Enterprise Affairs at the OECD and author of a recent paper in the Journal of Asian Economics, delivered technical yet impassioned remarks from an international perspective, linking the explosion of complex derivatives to lax regulation, international tax arbitrage, and the persistent "equity culture" on Wall Street. The Basel II capital requirement regime was an unmitigated failure, Blundell-Wignall argued, which failed to tame excessive leverage and risk-taking. By contrast, Australia's financial sector, a highly-regulated oligopoly which eschewed complex securitization and the "contagion risk," has weathered the storm without a single dollar of taxpayer support.

Some of the emergency measures undertaken last fall, including bank bailouts and unconventional monetary policy, were painful yet necessary responses to an unprecedented crisis. Yet policymakers have failed to address the fundamental problems of industry competition and corporate governance that enabled the financial calamity, most notably the "equity culture" and the "too big to fail" problem: "We've allowed some monsters to emerge in the world of banking," Blundell-Wignall concluded, "and I just don't know what to do about it."

 

Participants

featured speaker
Adrian Blundell-Wignall
Deputy Director, Financial and Enterprise Affairs, OECD
Author, "Origins of the Financial Crisis and Requirements for Reform"

moderator
Michael Lind
Policy Director, Economic Growth Program
New America Foundation
Issues:

Event Time and Location

Tuesday, October 13, 2009 - 8:30am - 10:00am

Related Programs

Event Photos

A range of photos from this event are available on Flickr. Click on the icon at left to view or download the photos.