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 Report distills 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 Report contains urgent recommendations that will positively influence everyone's financial well-being--all who care about the world's economic health need to pay attention.
"If you asked me to recommend one thing to read on reforming financial regulation, [The Squam Lake Report] would be it."--Clive Crook, The Atlantic
"The Squam Lake Report [is] a slim volume that contains the best prescriptions of the brightest minds of economics about how to save the financial system."--Heidi N. Moore, CNNMoney.com
"The Squam Lake Report is a slight volume of ten chapters and just 157 pages--practically anorexic by the standards of many tomes about the credit crunch--but it makes heavyweight claims. It is the product of 15 of the leading financial economists in the United States, who first met on a weekend retreat to New Hampshire's remote and scenic Squam Lake, and offers their prescriptions for regulatory reform to stave off future collapses."--New Statesman
"Fifteen prominent academic US economists developed this concise set of recommendations for financial regulation reform in Fall 2008 in a desire to prevent a recurrence of the financial crisis that developed in 2007 and whose effects continue to the present. The introductory chapter provides an excellent summary of the cascade of financial catastrophes precipitated initially by losses on mortgage-backed securities. . . . [A] useful volume for its historical overview and coverage of key issues."--Choice
"The Squam Lake Report is an important book in a growing library of commentary on the worst financial crisis since the Depression. It delivers good and clearly written recommendations and reviews most of the key issues surrounding the crisis."--Mark S. Rzepczynski, Financial Analysts Journal
"The Squam Lake Report is an excellent primer on the workings and failures of today's sophisticated financial system. Few can fail to be impressed with the scholarship the Report brings to the subject of reform."--Alan Greenspan
Table of Contents:
Chapter 1: Introduction 1
Chapter 2: A Systemic Regulator for Financial Markets 33
Chapter 3: A New Information Infrastructure for Financial Markets 44
Chapter 4: Regulation of Retirement Savings 53
Chapter 5: Reforming Capital Requirements 67
Chapter 6: Regulation of Executive Compensation in Financial Services 75
Chapter 7: An Expedited Mechanism to Recapitalize Distressed Financial Firms: Regulatory Hybrid Securities 86
Chapter 8: Improving Resolution Options for Systemically Important Financial Institutions 95
Chapter 9: Credit Default Swaps, Clearinghouses, and Exchanges 109
Chapter 10: Prime Brokers, Derivatives Dealers, and Runs 122
Chapter 11: Conclusions 135
List of Contributors 153
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