The Financial Crisis

Who is to Blame?

Howard Davies, Howard Davies

• Publisher: Polity
• Year: 2014
• Print ISBN:
  9780745651644
  9780745651637
• Edition: 1
• eBook ISBN:
  9780745680774
• Topic: Economics
• Subtopic: Macroeconomics
• Index: Economics

There is still no consensus on who or what caused the financial crisis which engulfed the world, beginning in the summer of 2007.

A huge number of suspects have been identified, from greedy investment bankers, through feckless borrowers, dilatory regulators and myopic central bankers to violent video games and high levels of testosterone among the denizens of trading floors. There is not even agreement on whether the crisis shows a need for more government intervention in markets, or less: some maintain that government encouragement of home ownership lay at the heart of the problem in the US, in particular.

In The Financial Crisis Howard Davies charts a course through these arguments, and the evidence advanced for each of them. The reader can thereby assess the weight to be attached to each, and the likely effectiveness of the remedies under development.

INDEX

ABN Amro, 98

accounting failed companies, 119

fair value accounting, 111–17

prudential regulators and, 112–13

securitization and, 47–8, 113–14

standards, 111–12

tricks, 5

See also auditors

advertising, 199, 200

agency theory, 181

AIG, 59, 60–1, 113, 158, 162

Akerlof, George, 182

Apgar, William, 32

Asian financial crisis, 164, 165, 214

asymmetric information, 155

ATM, 140

Attali, Jacques, 10–11

auditors, 5, 91, 100, 119–22, 151

Australia, regulatory structure, 97

Bair, Sheila, 77–8

Ball, Ray, 188–9

Balls, Ed, 89–90

bank capital

Basel accords, 37–8, 42, 43, 44, 51, 127

Modigliani--Miller view, 40

procyclicality, 42–5

recapitalization, 1, 87

shortage hypothesis, 5, 37–41, 215

Bank for International Settlements

(BIS), 19, 23, 135–6

Bank of America, 66, 152

Bank of England, 48, 50, 51, 52, 93–6, 128

banks

attitudes to risk, 85–6

capital. See bank capital cross-border regulation, 51, 54

governance. See corporate

governance levy on, 87

liquidity, 45, 50–5, 155–6, 214, 215

living wills, 86

proprietary trading, 80, 82

quantitative models, 188

secrecy, 105

shadow banking market, 47–8, 105, 106

state guarantees, 85

too big to fail, 40, 84–8, 215

See also central banks

Banque de France,...

Table of contents

• Cover
• HalfTitle
• Title
• Copyright
• Contents
• Acknowledgements
• Introduction
• A: The Big Picture
• B: The Trigger
• C: The Failures of Regulation
• D: Ac countants, Auditors and Rating Agencies
• E: Financial Firms and Markets
• F: Economics and Finance Theory: Irrational Expectations
• G: Wild Cards
• And Finally …
• Index