Notre Dame undergraduates had an opportunity to get an insider’s perspective on the handling of the recent recession when Nellie Liang, a director of the Federal Reserve Board (the Fed) of Governors, came to campus to give a lecture aimed at economics majors on financial stability politics after the financial crisis. Liang, who graduated from Notre Dame in 1979 with a B.A. in economics, gave a broad overview of the Fed’s role in combating the collapse, focusing on the theory of bank runs and how to prevent future crises in the financial sector. “From my personal perspective there are two parts of the recent crisis that I find fascinating from an economics point-of-view and really important for what we’re doing going forward: investor runs – that is, banks runs and panics – and how to address the largest financial institutions going forward,” Liang said. Liang elaborated on the theory of bank runs and how they cause widespread financial instability in a system, often without good warning or reason. “Bank runs really cause trouble, or we think of financial instability or systemic risk, when there’s a rumor about a bank that leads to rumors about other banks,” Liang said. “If you’ve got a bank here that doesn’t look so good, and you don’t really understand why it doesn’t look good, then why should the bank over there look good? And so that’s what we would call panic, widespread bank runs that force the fire sales of bank assets.” Liang said some of her research focused on getting at the underlying theory of bank runs, and investigating the possibility of predicting them in a model. “There are two models of runs: one is called ‘sunspot,’ meaning that they’re just random and inherent in a short-term model, so there’s just not much you can do about it, except maybe government insurance,” Liang said. “Or they could be related to underlying economics, which is what we investigated with regression analysis. We found that the runs could be explainable, especially over a matter of weeks.” The result of this research reinforced a central theme of Liang’s talk, namely that preventing the factors leading to a financial meltdown in the first place is far more effective than trying to deal with crisis. “When you’re in trouble, when you’re in a crisis, there are no good decisions, so you really need to think about how to avoid getting there and that’s where you spend your effort,” Liang said. In addition to examining the patterns and effects of bank runs, Liang addressed the need to regulate the largest financial institutions that pose the greatest systemic risk. “Safety and soundness in individual institutions is just not sufficient for financial stability – distress at some firms can lead to distress at others, sort of like innocent bystanders, so this needs to be incorporated into how we think about designing regulations for banks,” Liang said. “Big banks that might impose distress on others have to hold more capital so that they’re less likely to reach that point.” Liang said it is important to acknowledge the growing importance of non-regulated sectors in the industry, known as shadow banks, in considering policy formulation. “Shadow banks are non-regulated banks – this includes things like securitizations, finance companies that aren’t banks, mutual funds, insurance companies, so there’s a lot of intermediation that goes on in finance,” Liang said. “They were practically non-existent in the 1960s, but this sector has grown over time and is now about as large as the banking sector in GDP terms. Although they don’t have access to government insurance, it’s not clear that we may even want them to.” Liang ended her talk by emphasizing the importance of continual supervision of the financial industry going forward, especially as it returns to full health and, potentially, old habits. “We have to keep monitoring systemic risk because when you put more regulation in one part, the activities seep into other parts of the system,” Liang said. “And, lastly, history has shown that memories are very short and five years from now people will be happy to take these sorts of risks again, so we have to keep an eye on that.” Contact Henry Gens at [email protected]
SHARE Email Facebook Twitter Government That Works, Infrastructure, Press Release Pittsburgh, PA – Governor Tom Wolf joined PennDOT District 11 District Executive H. Daniel Cessna, P. E., elected officials and community members in celebrating the opening today of the new Hulton Bridge in Oakmont, Allegheny County.“Today’s opening represents another step forward for the region’s mobility,” Gov. Wolf said. “Investing in our roads and bridges sets the stage for economic growth, and we are fortunate to have resources to deliver such improvements.”The $65.7 million Hulton Bridge replacement project over the Allegheny River began in September 2013. The new structure is approximately 1,600 feet long and 69 feet wide and will carry two 11-foot lanes of traffic in each direction with a six-foot shoulder.“We worked hard to minimize disruption during this project and the new bridge meets the needs of motorists, pedestrians and bicyclists,” Cessna said. “It is with great pride that our PennDOT team opens this bridge as a vital transportation link in our region.”Additionally, the project included the reconstruction of approximately 1,300 feet of Freeport Road in Harmar Township and 550 feet of Hulton Road in Oakmont Borough. Dual left turn lanes will be implemented on the western end of the project for southbound Freeport Road traffic to access the bridge. Eastbound bridge traffic will use two lanes to Allegheny Avenue.Improvements such as wider shoulders for safe bicycle travel and an improved walkway for pedestrians enhance the enjoyment of the Allegheny River view.“For more than a century the Hulton Bridge has been a vital link in the Allegheny Valley,” said Rep. Frank Dermody, an Oakmont resident. “The new bridge means greater safety, smoother traffic flow and a better quality of life for thousands of people in the valley.”The existing structurally deficient bridge was built in 1908. It will be demolished in 2016. Gannett Fleming designed the new bridge, while Brayman Construction Corporation is the prime contractor. For additional project information, visit: http://thehultonbridge.com/.PennDOT emphasizes that motorists can check conditions on major roadways by visiting www.511PA.com. 511PA, which is free and available 24 hours a day, provides traffic delay warnings, weather forecasts, traffic speed information and access to more than 770 traffic cameras. 511PA is also available through a smartphone application for iPhone and Android devices, by calling 5-1-1, or by following regional Twitter alerts accessible on the 511PA website. Governor Wolf Joins State Officials to Open New Hulton Bridge October 20, 2015
December 06, 2017 Flag Order, Press Release Harrisburg, PA – Governor Tom Wolf has ordered all commonwealth flags at the Capitol Complex and throughout the state to be lowered to half-staff on Thursday, December 7, 2017, in honor of National Pearl Harbor Remembrance Day.This year marks the 76th anniversary of the attack on Pearl Harbor in which more than 2,400 Americans lost their lives.On December 7th, commonwealth flags shall be lowered to half-staff at sunrise and remain lowered until sunset. The United States Flag should also be lowered to half-staff during this time.All Pennsylvanians are invited to participate in this tribute. Governor Wolf Orders Flags to Half-Staff in Honor of National Pearl Harbor Remembrance Day SHARE Email Facebook Twitter
Morris, Ind. — Indiana State Police say one person was killed in a crash on State Road 46 near County Road 650 East Saturday at 6:50 p.m.No other information is available at this time. UPDATE 3:15 p.m.Indiana State Police say a child was injured and was transported to Margaret Mary Health then to an Indianapolis area hospital, Two others were seriously injured and transported to a Cincinnati-area hospital. No names have been released.
AMES — Iowa State returns to the spot of a breakthrough win in 2017 when they visit ninth ranked Oklahoma. Two years ago the Cyclones stunned the third ranked Sooners 38-31 and would go on to post eight wins in Matt Campbell’s second season as head coach.Quarterback Brock Purdy had three interceptions in the fourth quarter of a loss to Oklahoma State. Campbell expects the sophomore to bounce back with a strong effort.Campbell says the first priority of the bye week was to rest and get healthy.Kickoff in Norman on Saturday is scheduled for 7 o’clock. —- Regional volleyball championship matches== 4A Region 6 last night in Manchester#5 West Delaware 3-0 Charles City (25-12, 25-16, 25-10)== 2A Region 2 tonight at Garner —- #5 Osage (35-6) vs. Emmetsburg (20-11) AMES — Iowa State will be without two freshman when they open the season tonight at home against Mississippi Valley State. Marcedus Leech and Luke Anderson informed coach Steve Prohm they are leaving the team.Prohm says both intend to transfer.Prohm says he wants to see the Cyclones play the right way in the opener.Tipoff at Hilton Coliseum tonight is scheduled for 7 o’clock. MINNEAPOLIS (AP) — The Minnesota Twins have declined a $7.5 million option on left-hander Martin Pérez and made a $17.8 million qualifying offer to All-Star right-hander Jake Odorizzi. Pérez will receive a $500,000 buyout as part of a contract agreed to last winter that paid him a $3.5 million salary this year. IOWA CITY — Joe Wieskamp led five Iowa players in double figures with 19 points as the Hawkeyes beat Lindsey Wilson College 96-58 in exhibition play last night, as you heard on AM-1300 KGLO. After redshirting a year ago CJ Fredrick made his Hawkeye debut with 18 points, including four of five from three point range.The Hawkeyes had 26 assists on 34 baskets.Iowa has their season opener on Friday when they host Southern Illinois-Edwardsville. Tipoff is at 8 o’clock. We’ll join the game in progress after the St. Ansgar-Earlham Class A football quarterfinal round game on AM-1300 KGLO.