The Squam Lake Report: Fixing the Financial System

by French, Kenneth R.; Baily, Martin N.; Campbell, John Y.; Cochrane, John H.; Diamond, Douglas W.

• ISBN13: 9781400835805
• ISBN10: 1400835801
• Copyright: 2010-06-22
• Publisher: Princeton Univ Pr

Summary

In the fall of 2008, fifteen of the world's leading economists--representing the broadest spectrum of economic opinion--gathered at New Hampshire's Squam Lake. Their goal: the mapping of a long-term plan for financial regulation reform.The Squam Lake Reportdistills the wealth of insights from the ongoing collaboration that began at these meetings and provides a revelatory, unified, and coherent voice for fixing our troubled and damaged financial markets. As an alternative to the patchwork solutions and ideologically charged proposals that have dominated other discussions, the Squam Lake group sets forth a clear nonpartisan plan of action to transform the regulation of financial markets--not just for the current climate--but for generations to come.Arguing that there has been a conflict between financial institutions and society, these diverse experts present sound and transparent prescriptions to reduce this divide. They look at the critical holes in the existing regulatory framework for handling complex financial institutions, retirement savings, and credit default swaps. They offer ideas for new financial instruments designed to recapitalize banks without burdening taxpayers. To lower the risk that large banks will fail, the authors call for higher capital requirements as well as a systemic regulator who is part of the central bank. They collectively analyze where the financial system has failed, and how these weak points should be overhauled.Combining an immense depth of academic, private sector, and public policy experience,The Squam Lake Reportcontains urgent recommendations that will positively influence everyone's financial well-being--all who care about the world's economic health need to pay attention.

Table of Contents

Preface	p. vii
Acknowledgments	p. xi
Introduction	p. 1
A Systemic Regulator for Financial Markets	p. 33
A New Information Infrastructure for Financial Markets	p. 44
Regulation of Retirement Savings	p. 53
Reforming Capital Requirements	p. 67
Regulation of Executive Compensation in Financial Services	p. 75
An Expedited Mechanism to Recapitalize Distressed Financial Firms: Regulatory Hybrid Securities	p. 86
Improving Resolution Options for Systemically Important Financial Institutions	p. 95
Credit Default Swaps, Clearinghouses, and Exchanges	p. 109
Prime Brokers, Derivatives Dealers, and Runs	p. 122
Conclusions	p. 135
List of Contributors	p. 153
Index	p. 157
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