Banks and governments: What’s the deal?
Book Forum
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Event Summary

Banking systems should be understood as mutually profitable political bargains between governments and banks, argues Charles Calomiris in his and Stephen Haber's provocative new book, "Fragile by Design: The Political Origins of Banking Crises and Scarce Credit." At a book forum on Wednesday evening, Calomiris discussed how such deals vary among countries, resulting in some robust banking systems and others that are prone to collapse.

Describing the last 40 years as the most crisis-prone period in banking history, Calomiris highlighted how only six countries both retained abundant credit and remained crisis free. These six states were either politically homogeneous or democracies with a history of antipopulist constitutions. However, he noted that democratic countries can also have endemic banking crises. Contrasting the history of banking structures in Canada and the US, Calomiris detailed how political groups captured economic benefits and weakened the US banking system, while Canada's constitutional structure blocked such bargains and produced a stable, competitive banking system.

AEI's Paul Kupiec agreed that one of the most important determinants of the size and stability of the financial sector is its political environment. Alex Pollock, also of AEI, concluded by drawing an interesting analogy between shifting bank bargains and the evolution of the names of the congressional committees that deal with banking affairs in the US from the Committee on Banking and Currency to the Committee on Banking, Housing, and Urban Affairs.
--Rahee Jung

Event Description

The world displays an instructive variety of banking system designs, some successful, some fragile, and some crisis prone. For example, the US has had numerous banking crises throughout its history while Canada has experienced none.

Surveying different banking systems in their new book, “Fragile by Design: The Political Origins of Banking Crises and Scarce Credit,” Charles Calomiris and Stephen Haber find a common element in all: a deal between the banks and politicians. But these banking bargains vary among countries. How are these deals made, what determines their terms, and how can the US banking system be improved? At this event, Charles Calomiris will present this provocative book, and a discussion by banking experts will follow.

If you are unable to attend, we welcome you to watch the event live on this page. Full video be posted within 24 hours.

Agenda

4:45 PM
Registration

5:00 PM
Introduction:
Alex J. Pollock, AEI

5:05 PM
Presentation:
Charles W. Calomiris, Columbia Business School and AEI

5:30 PM
Discussants:
Paul H. Kupiec, AEI
Alex Pollock, AEI

Moderator:
Alex J. Pollock, AEI

6:15 PM
Book Signing and Wine and Cheese Reception

Event Contact Information

For more information, please contact Emily Rapp at Emily.Rapp@aei.org, 202.419.5212.

Media Contact Information

For media inquiries, please contact MediaServices@aei.org, 202.862.5829.

Speaker Biographies

Charles Calomiris is the Henry Kaufman Professor of Financial Institutions at Columbia Business School and a research associate at the National Bureau of Economic Research. His research spans several areas, from banking and corporate finance to financial history and monetary economics. Calomiris also served on the 2000 International Financial Institution Advisory Commission. Known as the Meltzer Commission, this congressionally mandated group recommends specific reforms of the International Monetary Fund, World Bank, regional development banks, and the World Trade Organization to the US government.
 
Paul H. Kupiec is a resident scholar at AEI, where he studies the management and regulation of banks and financial institutions markets, including issues of systemic risk and the impact of financial regulations on the US economy. Before joining AEI, Kupiec was director of the Center for Financial Research at the Federal Deposit Insurance Corporation (FDIC), and served as chairman of the Research Task Force of the Basel Committee on Banking Supervision. Before joining the FDIC, he held positions at the International Monetary Fund, Freddie Mac, J.P. Morgan, and the Board of Governors of the Federal Reserve System. Kupiec has served on the editorial boards of the Journal of Financial Services Research, Journal of Risk, and Journal of Investment Management. He is a member of the Shadow Financial Regulatory Committee.

Alex J. Pollock joined AEI in 2004 after 35 years in banking. He was formerly president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. He is also the author of numerous articles on financial systems and the organizer of the Living in the Post-Bubble World series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. At AEI, he focuses on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards, and the banking system. He is the lead director of CME Group, a director of Great Lakes Higher Education Corporation and the International Union for Housing Finance, and chairman of the board of the Great Books Foundation.

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AEI Participants

 

Paul H.
Kupiec
  • Paul H. Kupiec is a resident scholar at the American Enterprise Institute (AEI), where he studies systemic risk and the management and regulations of banks and financial markets. He also follows the work of financial regulators such as the Federal Reserve and examines the impact of financial regulations on the US economy.

    Before joining AEI, Kupiec was an associate director of the Division of Insurance and Research within the Center for Financial Research at the Federal Deposit Insurance Corporation (FDIC), where he oversaw research on bank risk measurement and the development of regulatory policies such as Basel III. Kupiec was also director of the Center for Financial Research at the FDIC and chairman of the Research Task Force of the Basel Committee on Banking Supervision. He has previously worked at the International Monetary Fund (IMF), Freddie Mac, J.P. Morgan, and for the Division of Research and Statistics at the Board of Governors of the Federal Reserve System.

    Kupiec has edited many professional journals, including the Journal of Financial Services Research, Journal of Risk, and Journal of Investment Management.

    He has a bachelor of science degree in economics from George Washington University and a doctorate in economics — with a specialization in finance, theory, and econometrics — from the University of Pennsylvania.

  • Phone: 202.862.7167
    Email: paul.kupiec@aei.org
  • Assistant Info

    Name: Brian C. Marein
    Phone: 202.862.5890
    Email: brian.marein@aei.org

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org
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