Bailout Analysis Project

Since the fall of 2008, federal efforts to restore confidence and liquidity in the collapsing financial markets have tied up hundreds of billions of dollars in taxpayer funds, caused the Federal Reserve balance sheet to balloon past $2 trillion, and allowed - even encouraged - the nation's biggest banks to grow bigger. There is little doubt that aggressive action was needed, and most economists agree that the unprecedented government response helped pull the economy back from the cliff's edge. But now that markets have begun to stabilize, it is time to look at how this crisis has altered the financial landscape, and what needs to be done to prevent it from happening again.

To that end, the Economic Policy Institute created the Bailout Analysis Project, to track, comment on, and hold public forums on the financial rescue, in conjuction with partners at www.BailoutWatch.net. We have had three forums to date.

 

Community Banks in the Bailout, June 10:

See video of panel highlights

This panel explored the bailout's impact on the nation's 8,000 small and mid-sized banks. Panelists included: Christopher Whalen, managing director of Institutional Risk Analytics, which rates the economic strength of banks; Karen Thomas, executive vice president for governmental affairs for the Independent Community Bankers of America; and William Dunkelberg, a professor of economics at Temple University and co-founder of Liberty Bell Bank in New Jersey.

Related EPI Economic Snapshot on Community Banks in Trouble

FDIC list of Failed Banks

Nancy Cleeland: Huffington Post, Obama's Smart Move on Big Banks

 

The Federal Reserve's Exploding Balance Sheet, July 15:

See video of panel highlights and Sen. Sanders' keynote

Our forum on the Federal Reserve, its history of secrecy, and its expanded role in the financial crisis opened with a keynote address by Sen. Bernie Sanders (D-Vermont), who urged greater transparency in the central banking body. A panel discussion followed, featuring four experts with vastly different perspectives. Jon Faust, director of the Center for Financial Economics at Johns Hopkins University and a high-level Fed economist for nearly two decades; George Goehl, executive director of National People’s Action, a grassroots organization that convinced the Fed Chairman to hold a series of field hearings across the country; William Greider, the veteran journalist and author whose 1987 book on the Federal Reserve, Secrets of the Temple - still in print - is considered a classic; and Dean Baker, co-director of the Center for Economic and Policy Research, who has written extensively about the housing bubble and the Federal Reserve’s failure to take action to prevent it.

Related EPI Economic Snapshot looks at growing risk in Fed assets.

Federal Reserve site explains its balance sheet: http://federalreserve.gov/monetarypolicy/bst.htm

Federal Reserve Bank of Cleveland on unwinding: http://www.clevelandfed.org/research/data/credit_easing/index.cfm

 

What to do About Too Big To Fail, Sept. 9: 

See video of panel highlights

A handful of enormous financial institutions were at the heart of the U.S. financial crisis last fall. Because authorities feared the failure of these "Too Big To Fail" institutions would cause global panic, they were propped up with billions of dollars in government cash, loan subsidies and guarantees. There is a growing consensus among economists that more aggressive steps must be taken to rein in the TBTF institutions, although proposed solutions range widely. To discuss the problem and potential answers, our panel included Simon Johnson, a professor at MIT Sloan, and senior fellow at the Peterson Institute, and creator of the popular Baseline Scenario blog; John H. Boyd, a professor at the University of Minnesota and consultant for the Federal Reserve Bank of Minneapolis; Albert Foer, President, American Antitrust Institute; and Damon Silvers, Associate Counsel, AFL-CIO, and member of the Congressional Oversight Panel for TARP.

Related EPI Economic Snapshot on the growing share of assets held by big banks.

Simon Johnson: The Atlantic Monthly, May 2009, The Quiet Coup; Sept. 2009 slide presentation on crisis,

Ravi Jagannathan and John H. Boyd: The Economists Voice, 2009, Avoiding the Next Crisis.

Albert Foer: Testimony to House Subcommittee on limits and potential of competition policy