Aldean, Cory (2010): Financial crisis response plan.
Download (645kB) | Preview
Despite the recent highs and lows in international finance, the need for better understanding on the part of policy-makers, business leaders and the general public is evident to address future crisis. The study of other countries’ financial difficulties in recent history seems to be a key element missing in our nation’s response. The economy is too important to leave up to an ill prepared ad hoc emergency meeting. Rather than throwing together a government response, just-in-time at best, it would be advantageous to have a plan ready to pull off the shelf.
For such a plan, this paper suggests guiding principles, a plan outline, and options available to the policy-maker in the form of a Financial Crisis Response Plan (FCRP). It should mirror a typical government disaster response plan to some extent, but tailored to assist the Federal government’s response to a myriad of financial crises. The guiding principles for any financial response could be used for a just-in-time response, or for planning and writing plans in between crisis. The plan should be one that is A-political in nature, clearly identifies the problems, considers legal options available, and roles of responders. Such a plan should have strong measurable goals, and strive for universal application, cost savings to the tax-payer, consider all parties welfare including overseas counterparts, and a return to profitable business operations. Any plan developed must be comprehensive to all participating parties, with scheduled training and exercises.
Study of past crises and non-traditional sources will not replace but supplement existing principles utilized by government institutions. Several historical works of economists as well as more recent writings like those of Reinhart & Rogoff (2008) touch on financial crisis. The bulk of research for this paper was through foreign central bankers. Central banks have been through similar crises, and have suggested courses of action similar to the FCRP. Additionally, lesser known writers or economists, particularly those outside government payroll or Wall Street, have some value in the discussion. No one person will have all the answers and no single plan will be the ultimate government response, but many options should be explored. Thus, the plan here-in will not attempt to provide all the answers, but a framework for policy-makers (locally and globally) to arrive at those solutions.
|Item Type:||MPRA Paper|
|Original Title:||Financial crisis response plan|
|Keywords:||The paper recommends a government Financial Crisis Response Plan, with several options and guidelines described.|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination|
|Depositing User:||Cory Aldean|
|Date Deposited:||01. Feb 2011 19:34|
|Last Modified:||15. Feb 2013 16:33|
Allen, Franklin, and Gale Douglas. "Bubbles, Crises, and Policy." Oxford Review of Economic Policy 15.3 (1999): 11, 16-17.
Bernanke, Ben S. 1983. “Non-Monetary Effects of the Financial Crisis in the Propagation of the Great Depression”, The American Economic Review, 73: 5-7, 12-13.
Corkery, Michael. "Lehman Whistle-Blower's Fate: Fired." Wall Street Journal 16 Mar. 2010: 1.
Crotty, James. 2008. Structural Flaws in Deregulated Financial Markets Caused the Current Crisis. At www.economicsofcrisis.com: 566-571.
Dziobek, Claudia, and Ceyla Pazarbasioglu. "Lessons from Systemic Bank Restructuring." International Monetary Fund, Monetary And Exchange Affairs Dept 14 (2008): 6-13.
Ergungor, O. Emre. "On the Resolution of Financial Crises: The Swedish Experience." Policy Discussion Paper 21, Federal Reserve Bank of Cleveland. (2007): 6,9-10.
"FDIC: Federal Deposit Insurance Corporation." FDIC: Federal Deposit Insurance Corporation. N.p., n.d. Web. 15 Mar. 2010. <http://www.fdic.gov/>.
"Forget Health Care: Big Issue for Voters Is Financial Reform." Yahoo! Finance 18 Mar. 2010: 1. Goodhart, C.A.E. 2007. The Background to the 2007 Financial Crisis, International Economics and Economic Policy 4(4): 332-334, 339-345.
Griffith-Jones, Stephany and Jose Antonio Ocampo. 2009. The Financial Crisis and its Impact on Developing Countries. Columbia University International Policy Center for Inclusive Growth Working Paper 53: 2-3, 12-13.
Hoggarth, Glenn, Jack Reidhill, and Peter Sinclair. "On the Resolution of Banking Crises: Theory and Evidence." Bank of England, Working Paper 229 (2004): 9-15.
Kaminsky, Graciela and Carmen Reinhart. 1999. “The Twin Crises: The Causes of Banking and Balance-of-Payments Problems.” American Economic Review, 89(3): 474-476, 480-483, 490-491.
Mayes, David. "Financial Stability in a World of Cross-Border Banking: Nordic and Antipodean Solutions to the Problem of Responsibility Without Power." Viessmann European Research Center 1 (2009): 4, 7-11, 13-15, 18.
Moe, Thorvald, Jon Solheim, and Bent Vale. The Norwegian Banking Crisis (Norges Banks SkriftSerie Occasional Papers, Number 33, Oslo 2004). Oslo: Norges Bank, 2004:26, 78, 80-84, 86-99, 108-110.
Nakaso, Hiroshi. "The Financial Crisis in Japan During the 1990s: How the Bank of Japan Responded and the Lessons Learned." Bank for International Settlements 6 (2001): 2-8, 10-16, 29-40, 63.
Oberg, Svante. "Sweden and the Financial Crisis." Carlson Investment Management. Sveriges Riskbank, Stockholm. 20 Jan. 2009: 1-2, 4, 6, 10-13.
Reinhart, Carmen M. and Kenneth S. Rogoff. 2008. This Time is Different: A Panoramic View of Eight Centuries of Financial Crises. NBER Working Paper 13882: 160, 232, 280, 290, 371, 384.
Tankersley, Michael W.. "Board Leadership for the Company in Crisis." National Association of Corporate Directors (NACD). Gibson, Dunn, & Crutcher LLP. Webcast. 30 Oct. 2008: 7-16.
Task, Aaron. "Sen. Kaufman: Bring Back Glass-Steagall, Break Up ‘Too Big to Fail’ Banks." Yahoo Finance 25 Mar. 2010: 1.
Weidner, David. "Is There a Lehman Lurking on Wall Street?" MarketWatch 30 Mar. 2010: 1.
World Bank. "World View." 2009 World Development Indicators (2009): 3-8.