Three of the most instrumental figures of the 2008 financial crisis gathered at Yale earlier this month to reflect on the recent economic downturn and to consider strategies for preventing similar crises in the future.
In their first panel reunion since leaving office, former Secretaries of the Treasury Timothy Geithner and Henry Paulson were joined by former Federal Reserve Chairman Ben Bernanke for a “closed-door” discussion in front of an audience comprising international economic leaders and officials. The three-day meeting was part of a larger two-week annual forum organized through the Yale Program on Financial Stability, a Yale School of Management project aimed at providing research and training related to risk management in financial markets. According to Andrew Metrick, deputy dean at the SOM and director of the program, this type of “after engagement report” can often be overlooked for financial crises. As a result, academia can serve a critical role in facilitating rigorous analysis once markets recover.
“The idea was to have people in the room who would be the first person you would turn to in crisis in your country if you wanted advice on how would we design programs to try to stop this fire,” Metrick said. “I think the fact that the three of them were willing to get together and do this in front of this audience was their statement that, yes, this really is important.”
Participants in this master class were drawn from roughly 20 central banks and a handful of non-central bank organizations, including the Federal Deposit Insurance Corporation. Other notable guests in the auditorium included Bank of Mexico Governor Agustín Carstens and Governor of Bank Negara Malaysia Zeti Akhtar Aziz.
Though the panel discussion was closed to the press, Metrick said the content of the conversation did not include “shockingly new revelations.” Rather, the forum, which was funded by the Alfred P. Sloan Foundation, provided the speakers the opportunity to brainstorm collectively and provide an interesting interplay of ideas.
“You would be amazed to see these very senior people who were involved in fighting the crises, who have been in central banking for a lot of their careers saying, we had to figure stuff up as we went along,” Metrick said. “You cannot believe how much time we wasted saying, how do you do this?”
As a result, Metrick said, this type of panel discussion represents the earliest stages of getting the thoughts of these leaders on paper, subjecting it to close scrutiny and creating a resource for regulators moving forward.
In an email to the News, Geithner said the master class is aimed at the next generation of policy makers around the world.
“The forum was built around presentations by the architects of the strategies deployed in many of the most important financial crises of the last 30 years,” Geithner said. “And it was designed to allow extensive of debate about what works and what doesn’t, with the objective of improving outcomes in the future.”
This fall, students across the University will have an opportunity to hear more from Geithner as part of a new course he is co-teaching with Metrick titled, “Global Financial Crisis,” which centers on the causes, events, policy responses and aftermath of the most recent financial downturn.
Metrick said it was fitting for an institution of learning, particularly Yale, to host this type of discussion given its long commitment to civic engagement.
“The goal of the overarching project is to help the world understand what happened,” Metrick said. “We think it is a complicated, confusing event, and we would like to explain it better.”