LESSONS OF THE FINANCIAL CRISIS. Ben Steil, Council on Foreign Relations, July 2009, var. pages. "A new report from the Council on Foreign Relations (CFR), Lessons of the Financial Crisis, calls for major economic reforms, both to avoid fueling excessive corporate and individual borrowing in the future and to make the financial system much more resilient in the face of falling asset prices. "The crisis offers a sobering lesson about the dangers of policies that fuel the rapid buildup of debt across the economy," says the report. "Excessive leverage in the economy needs to be prevented because credit does not return to normal once asset prices stop rising and start falling. It becomes dangerously scarce." Although many are arguing that the crisis is a direct result of lax regulation, "U.S. monetary policy, taxation policy, and home ownership promotion policy were so conducive to credit expansion that the idea, understandably popular in Washington and Brussels, that preventing future such crises can be accomplished simply by waking up regulators ‘asleep at the switch' is dangerously simplistic," says Benn Steil, senior fellow and director of international economics at CFR. "The United States in particular, given that it effectively sets monetary and credit conditions for a significant portion of the global economy, needs to put in place policies that can better discourage, recognize, and curtail a credit boom, and ensure that systemically important financial institutions can withstand its unwinding." Steil lays out specific recommendations for reforming the international financial architecture, bank capital standards, borrower screening and monitoring, corporate and individual taxation regimes, over-the-counter (OTC) derivatives markets infrastructure, corporate governance, and monetary policy." READ MORE

THE FINAL DAYS OF MERRIL LYNCH. William D. Cohan, The Atlantic, September 2009, var. pp. "Last September, as Wall Street turned to rubble and panic threatened to come unleashed, Ken Lewis, the CEO of Bank of America, agreed to swallow one of the country’s most toxic investment houses. The deal was not altogether voluntary; as details have slowly emerged, the coercive role of the Fed and Treasury has loomed larger. What exactly happened in the weeks leading up to the merger? Did the deal save us all from economic apocalypse? And what does the government’s unprecedented role in it portend for the future of our economy?" READ MORE