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The Value of Connections in Turbulent Times: Evidence from the United States
The Value of Connections In Turbulent Times: Evidence from the United States Daron Acemoglu Simon Johnson Amir Kermani MIT and NBER MIT and NBER MIT James Kwak Todd Mitton University of Connecticut BYU First Version: May 2009 This Version: May 2013 Abstract The announcement of Tim Geithner as President-elect Obama’snominee for Treasury Sec- retary in November 2008 produced a cumulative abnormal return for …nancial …rms with which he had a personal connection. This return was around 15 percent from day 0 through day 10, relative to other comparable …nancial …rms. This result holds across a range of robustness checks and regardless of whether we measure connections in terms of …rms with headquar- ters in New York City, meetings he had in 2007-08, or non-pro…t board memberships he shared with …nancial services executives. There were subsequently abnormal negative returns for connected …rms when news broke that Geithner’s con…rmation might be derailed by tax issues. Roughly in line with market expectations, the Obama administration hired people from Geithner-connected …rms into top level …nancial policy positions. Geithner’s policies proved supportive of large …nancial …rms’executives, shareholders, and creditors –including for Citigroup, with which he had the strongest prior connections. But the market-perceived quantitative value of connections is broader than just for the “too big to fail” category. We argue that this value of connections re‡ects the perceived impact of relying on the advice of a small network of …nancial sector executives during a time of acute crisis and heightened policy discretion. Keywords: cultural capture, political connections, economic crises, institutions JEL Classi…cation: G01, G14, G21, G28 For helpful comments we thank seminar participants at MIT, Harvard Business School, the International Monetary Fund, the University of Alberta, BYU, and the 2012 Econometric Society meetings. -
U.S. Norms in Education and Diplomacy
© COPYRIGHT by Molly E. O’Connor 2014 ALL RIGHTS RESERVED ii U.S. NORMS IN EDUCATION AND DIPLOMACY BY Molly E. O’Connor ABSTRACT This paper identifies habits that contribute to American national identity, as demonstrated in the interactions of U.S. diplomats abroad. I examine the foundations of curriculum in U.S. education—and how national identity is reproduced within this domestic institution. Our American identity is the amalgamation of our individual habits which are rooted in our ideas, norms, and values of what is important and worthy of pursuit, what is proper and what is correct. These ideas form a discourse in American identity today, as they did in the time of John Dewey—father of modern education in the United States—and Alexis de Tocqueville—a sociologist, cultural anthropologist, and political commentator—who both have much to say on the relationship of formal education to national identity and politics. These particularly American cultural habits are elucidated in diplomatic action because diplomats are constantly in situations that highlight contrasts between cultures. iii ACKNOWLEDGEMENTS A special thank you goes to Ambassadors Melvyn Levitsky, Roger Kirk, and Jack Matlock for taking the time to meet with me and answer my questions. I could not have done the critical component of my thesis without your stories, and I really enjoyed hearing your experiences and observations first-hand. Secondly, I would like to acknowledge and thank those that helped me shape or edit this project—there are too many to name individually, but these conversations and commentary were invaluable. Most importantly, I would not have a finished thesis (or maybe even a started thesis) if it were not for the encouragement, direction, and critiques provided by Patrick Thaddeus Jackson, my thesis advisor. -
Celebrating10 Years WASHINGTON, D.C
UNITED STATES FOREIGN POLICY COLLOQUIUM May 29 - 31, 2013 Celebrating10 years WASHINGTON, D.C. THE NATIONAL COMMITTEE ON U.S. - CHINA RELATIONS In cooperation with 美中关系全国委员会 美国外交政策学术论坛 Discover how American UNITED STATES FOREIGN POLICY foreign policy is formulated from experts in the field COLLOQUIUM Discuss foreign policy events A three-day conference designed to help and issues with leading policymakers, academics, Chinese graduate students understand journalists, and business and the complex forces that influence & NGO leaders shape American foreign policy Build new friendships with fellow PRC students studying May 29 - 31, 2013 WASHINGTON, D.C. at institutions across the United States Chinese Ambassador to the United States Zhang Yesui chats with 2012 Foreign Policy Colloquium (FPC) participants during our opening reception. 1 美国外交政策学术论坛 UNITED STATES FOREIGN POLICY Day 1 Opening night program & keynote address COLLOQUIUM Networking reception with fellow FPC participants, speakers, and special guests Day 2 Introduction & overview of the program Ideals & interests in U.S. foreign policy Making of U.S. foreign policy Marketplace of ideas Role of the media in U.S. foreign policy Off-site visits & briefings Day 3 Discussion with a senior U.S. government official Questions of liberty & security U.S. foreign policy round-up Site visit reports The future of U.S.-China relations Closing party The above reflects programs from previous sessions of the FPC. Our 2013 schedule will be confirmed by late April and may include different sessions. Left: 2012 FPC participants take in one of our presentations. A sampling of past speakers Our speakers hail from diverse backgrounds and include current and former Administration officials and members of Congress, as well as representatives from academia, the military, think tanks, media, business, and lobbying groups, among others. -
ML Strategies Update Financial Services Legislative and Regulatory Update
ML Strategies Update Jason Rosenstock [email protected] ML Strategies, LLC 701 Pennsylvania Avenue, N.W. Abby Matousek Washington, DC 20004 USA [email protected] 202 296 3622 202 434 7400 fax Follow us on Twitter: @MLSFinRegUpdate www.mlstrategies.com JANUARY 14‚ 2013 Financial Services Legislative and Regulatory Update Leading the Past Week As was widely anticipated, President Obama announced that he was nominating Jack Lew to succeed Treasury Secretary Geithner. With Lew having already gone through the confirmation process twice before, it is expected that he will sail through. However, it does seem that he has some detractors, and that there could be opposition based more on policy than personality. And of course, there is “serious” concern about how his unique signature would appear on the nation’s currency. The Congressional recess last week didn’t prevent the CFPB from rolling out its much anticipated qualified mortgage, or “QM” standard, which was included as part of a larger “ability to repay rule”. This new rule, along with the continued announcements of additional settlements between lenders and their regulators, the latest one dealing with questionable foreclosure practices, is seen by some as necessary to turn the page on the core causes of the financial crisis. Similarly, in international news, the Basel Committee finalized recommendations for liquidity standards and risk reporting, with the former offering concessions to the industry. Legislative Branch Senate Senate Confirms Berner to Head Office of Financial Research On January 1st, following the release of a hold by Senator Charles Grassley (R-IA), the Senate confirmed Richard Berner to head the Treasury Department’s Office of Financial Research (OFR). -
Congress Underestimated: the Case of the World Bank
University of Michigan Law School University of Michigan Law School Scholarship Repository Articles Faculty Scholarship 2013 Congress Underestimated: The aC se of the World Bank Kristina Daugirdas University of Michigan Law School, [email protected] Available at: https://repository.law.umich.edu/articles/625 Follow this and additional works at: https://repository.law.umich.edu/articles Part of the Constitutional Law Commons, Legislation Commons, Organizations Law Commons, and the President/Executive Department Commons Recommended Citation Daugirdas, Kristina. "Congress Underestimated: The asC e of the World Bank." Am. J. Int'l L. 107, no. 3 (2013): 517-62. This Article is brought to you for free and open access by the Faculty Scholarship at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Articles by an authorized administrator of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. This article is reproduced with permission from the July 2013 issue of the American Journal of International Law © 2013 American Society of International Law. All rights reserved. CONGRESS UNDERESTIMATED: THE CASE OF THE WORLD BANK By Kristina Daugirdas* International organizations undermine democracy, or so their critics charge: not only do international organizations themselves operate undemocratically,1 but they undercut demo- cratic governance within their member states. In particular, when states participate in inter- national organizations, they lose control over policy outcomes because each state must share decision-making authority with other member states.2 And within member states, national legislatures—the bodies specifically designed to be responsive to popular control—are margin- alized.3 Legislatures lack direct influence over international organizations and also have little influence over the executive branch’s interactions with such organizations.4 * Assistant Professor of Law, University of Michigan Law School. -
Ukraine NATO and the Geithner Doctrine
Ukraine, NATO Enlargement, and the Geithner Doctrine Clifford G. Gaddy and Barry W. Ickes* “[T]he central paradox of financial crises is that what feels just and fair is the opposite of what’s required for a just and fair outcome.” — Former U.S. Treasury Secretary Timothy Geithner, The New York Times, November 5, 2011 Sober analysis of the current stand-off over Ukraine tells us we are in a deep mess, worse than people tend to recognize. The events playing out now are bigger than Ukraine (even though, as we explain elsewhere, Ukraine is important to Russia). Both Russia and the West are deeply committed to broader objectives that seem fundamentally irreconcilable. There are no easy solutions to the crisis. Finding a way out is going to be long, costly, and messy, and the best final outcome is likely to feel unsatisfactory. In this regard, the remarks by Timothy Geithner quoted above are relevant. They are even more appropriate because Russia, through its current actions in Ukraine, has exposed the post-Cold War order in Europe as the geopolitical equivalent of a financial bubble. We have enjoyed two decades of benefits from this order. But we did so under the illusion that it was nearly costless. Now we are finding out that there is a bill to pay. To understand this metaphor, we need to examine how the crisis developed. The Missing Quadrant We can explain by using a simple framework that we first developed in 2008 after the Georgia crisis. Imagine a matrix with two columns, one labelled “Strong Russia” and the other “Weak Russia,” and two rows, one for “Good Russia” and the other for “Bad Russia.” Into the quadrants of this matrix we place the various “future Russias” as they were envisioned by most Western policymakers in the early 1990s after the collapse of the Soviet Union. -
Resolution of Failed Financial Institutions: Orderly Liquidation Authority and a New Chapter 14
RESOLUTION OF FAILED FINANCIAL INSTITUTIONS: ORDERLY LIQUIDATION AUTHORITY AND A NEW CHAPTER 14 Studies by the Resolution Project at Stanford University's Hoover Institution Working Group on Economic Policy By Thomas H. Jackson Kenneth E. Scott Kimberly Anne Summe John B. Taylor Resolution Project Members Andrew Crockett, Darrell Duffie, Richard J. Herring, Thomas H. Jackson, William F. Kroener, Kenneth E. Scott, David Skeel, George P. Shultz, Kimberly Anne Summe, John B. Taylor April 25, 2011 CONTENTS Preface JOHN B. TAYLOR 1. A Guide to the Resolution of Failed Financial Institutions: Dodd-Frank Title II and Proposed Chapter 14 KENNETH E. SCOTT 2. Bankruptcy Code Chapter 14: A Proposal THOMAS H. JACKSON 3. An Examination of Lehman Brothers' Derivatives Portfolio Post-Bankruptcy and Whether Dodd-Frank Would Have Made Any Difference KIMBERLY ANNE SUMME 4. Dodd-Frank: Resolution or Expropriation? KENNETH E. SCOTT page I. PREFACE By John B. Taylor Let's write Chapter 14 into the law so that we have a credible alternative to bailouts in practice. We can then be ready to use a rules-based bankruptcy process to allow financial firms to fail without causing financial disruption --George P. Shultz foot note 1 "A Conversation About Key Conclusions," in Ending Government Bailouts As We Know Them, Kenneth E. Scott, George P. Shultz, John B. Taylor (Eds.), Hoover Press, 2009, p. 287. end of foot note. The purpose of this short collection of papers is to demonstrate why the "orderly liquidation authority" in Title II of the Dodd-Frank bill "Wall Street Reform and Consumer Protection Act of 2010" should be supplemented with a new and more predictable bankruptcy process designed specifically for large financial institutions. -
A Minsky Meltdown: Lessons for Central Bankers1
Presentation to the 18th Annual Hyman P. Minsky Conference on the State of the U.S. and World Economies—“Meeting the Challenges of the Financial Crisis” Organized by the Levy Economics Institute of Bard College New York City By Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco For delivery on April 16, 2009, 8:00 PM Eastern Time, 5:00 PM Pacific A Minsky Meltdown: Lessons for Central Bankers1 It’s a great pleasure to speak to this distinguished group at a conference named for Hyman P. Minsky. My last talk here took place 13 years ago when I served on the Fed’s Board of Governors. My topic then was “The ‘New’ Science of Credit Risk Management at Financial Institutions.” It described innovations that I expected to improve the measurement and management of risk. My talk today is titled “A Minsky Meltdown: Lessons for Central Bankers.” I won’t dwell on the irony of that. Suffice it to say that, with the financial world in turmoil, Minsky’s work has become required reading. It is getting the recognition it richly deserves. The dramatic events of the past year and a half are a classic case of the kind of systemic breakdown that he—and relatively few others—envisioned. Central to Minsky’s view of how financial meltdowns occur, of course, are “asset price bubbles.” This evening I will revisit the ongoing debate over whether central banks should act to counter such bubbles and discuss “lessons learned.” This issue seems especially compelling now that it’s evident that episodes of exuberance, like the ones that led to our bond and house price bubbles, can be time bombs that cause catastrophic damage to the economy when they explode. -
East Asian Bilateral Relations, 4Q 1999
U.S.-China Relations: Progress Amidst Persisting Deep Suspicions Bonnie S. Glaser n the final quarter of 1999, the U.S. and China signed two important agreements that will Ilikely aid in stabilizing the bilateral relationship after a rocky period following the accidental bombing of the Chinese embassy in Belgrade last May. The first, a bilateral accord on the terms under which China will enter the World Trade Organization (WTO), represents an important milestone for Sino-U.S. ties and signals a reaffirmation of China’s commitment to market liberalization and economic reform. The second, an agreement settling the issue of compensation by both the U.S. and China for damage to their respective diplomatic property stemming from the accidental embassy bombing, constitutes an important step in the tortuous and as yet unfinished process of restoring normalcy to the bilateral relationship. While the initial steps toward restarting military contacts were recently taken, bilateral dialogues on arms control and human rights have yet to be resumed and strains continue to increase in both areas as well as on the Taiwan issue. Landmark WTO Accord is Reached After 13 years of negotiations, China and the U.S. reached agreement on Nov. 15 on the terms under which China will enter the WTO. The impetus to conclude an accord came from Washington, which judged after the Jiang-Clinton meeting in Auckland, New Zealand in September that the Chinese side was politically stalemated and unable to forge a consensus without a push from the U.S. side. President Clinton called Jiang twice, on October 16 and again on November 8, to prod Beijing to resume serious negotiations aimed at closing a deal. -
“Paulson Put,” Presidential Politics, and the Global Financial Meltdown Part I: from Shadow Financial System to Shadow Bailout
International Journal of Political Economy, vol. 38, no. 1, Spring 2009, pp. 3–34. © 2009 M.E. Sharpe, Inc. All rights reserved. ISSN 0891–1916/2009 $9.50 + 0.00. DOI 10.2753/IJP0891-1916380101 THOMAS FERGUSON AND ROBER T JOHNSON Too Big to Bail: The “Paulson Put,” Presidential Politics, and the Global Financial Meltdown Part I: From Shadow Financial System to Shadow Bailout Abstract: This paper analyzes how a world financial meltdown developed out of U.S. subprime mortgage markets. It outlines how deregulatory initiatives allowed Wall Street to build an entire line of new, risky financial products out of raw ma- terials the mortgage markets supplied. We show how further bipartisan regulatory failures allowed these same firms to take on extreme amounts of leverage, which guaranteed that when a crisis hit, it would be severe. A principle focus is the “Paulson Put”—the effort by the U.S. Treasury secretary to stave off high-profile public financial bailouts until after the 2008 presidential election. The paper shows how the Federal Home Loan Bank System and other government agencies were successfully pressed into service for this purpose—for a while. Keywords: bank regulation, financial crisis, investment banks, political economy In 2008, a strong whiff of millenarianism crept into American public life. As voters flocked to the primaries in startling numbers, many Democrats became convinced that the Second Coming lay just around the corner. By contrast, sentiment among Thomas Ferguson is a professor of political science at the University of Massachusetts, Boston. Robert Johnson was managing director at Soros Funds Management and chief economist of the U.S. -
March 25, 2009 the Honorable Timothy Geithner Secretary United States Department of the Treasury 1500 Pennsylvania Avenue, NW W
March 25, 2009 The Honorable Timothy Geithner Secretary United States Department of the Treasury 1500 Pennsylvania Avenue, NW Washington, D.C. 20220 The Honorable Lawrence Summers Director National Economic Council 1600 Pennsylvania Ave. NW Washington, DC 20500 Honorable Shaun Donovan Secretary U.S. Department of Housing and Urban Development 451 7th Street S.W. Washington, DC 20410 Dear Secretary Geithner, Secretary Donovan, and Director Summers, The undersigned organizations request the opportunity to meet with you to discuss the Treasury Department’s loan modification program. Our organizations represent the people and communities hardest hit by the current economic crisis, and we have been working on the frontlines to provide assistance to distressed homeowners. We have seen how the stated policies of loan servicers are implemented on the ground, and understand the kinds of loan modifications that do and don’t offer long-term sustainability. The Administration’s new Home Affordable Modification Program (“HAMP”) is a significant step toward sustaining communities by providing homeowners with affordable loans. We applaud the Administration’s efforts to develop a program focused on the needs of homeowners. Among its strengths, we are especially pleased that the program: • Supports affordable loan modifications based on modest debt-to-income ratios with substantial decreases in payments and interest rates; • Stops foreclosures while loan modification analyses are occurring; • Requires participating institutions to apply the program to all loans they own, in whole or in part, and/or service and to take reasonable steps to secure additional authority where needed; • Waives any partial prepayment penalties when principal is modified; and • Permits more aggressive modifications when appropriate to achieve affordability and sustainability. -
The Ben Bernanke and Janet Yellen Investment Portfolios | Seeking Alpha 7/31/15, 5:33 PM
The Ben Bernanke And Janet Yellen Investment Portfolios | Seeking Alpha 7/31/15, 5:33 PM The Ben Bernanke And Janet Yellen Investment Portfolios "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years" - Warren Buffett When it comes to financial security, one could argue that the chairman of the Federal Reserve Board of Governors would be a great role model to emulate. As an obligation of duty, the chairman and all members of the board are required to disclose their assets and income to the U.S. Office of Government Ethics. U.S. President Barack Obama made it clear that when Ben Bernanke's second term expires on 1-31-2014, there will be a new chairman of which current Vice Chairman of the Board of Governors, Janet Yellen, is the current front-runner. By analyzing their respective investment portfolios, one can gain insight into astute money management techniques as well as their individual stock selections. The Man On February 1, 2006, Ben Bernanke was sworn in as a 14-year term member of the Federal Reserve Board of Governors, as well as Fed Chairman, which was a 4-year term. U.S. President Bush appointed him just before the beginning of the Global Financial Crisis, where Bernanke, along with U.S. Treasury Secretary Henry Paulson and the president of the Federal Reserve Bank of New York Timothy Geithner organized the economic bailout that arguably sidelined a global depression.