The New Lombard Street: Modern Money and the Financial Crisis
- 4/17/2013 |
7:30 PM – 8:45 PM
Location: Searles Science Building, Room 315
Event Type: Lecture
Perry Mehrling, professor of economics at Barnard College, Columbia University comes to Bowdoin to give a talk based on his book, The New Lombard Street: How the Fed Became the Dealer of Last Resort. Published by Princeton University Press in 2010, the book's title references Walter Bagehot's 1873 Lombard Street,
published in the wake of a devastating London bank collapse. Bagehot
explained in clear and straightforward terms why central banks must
serve as the lender of last resort in order to ensure liquidity in a
faltering credit system and his book set down the principles that helped
define the role of modern central banks, particularly in times of
crisis. The recent global financial meltdown, however, has posed
unforeseen challenges. Mehrling's New Lombard Street lays out the innovative principles needed to address the instability of today's markets and to rebuild our financial system.
Revealing how we arrived at the current crisis, Mehrling traces the evolution of ideas and institutions in the American banking system since the establishment of the Federal Reserve in 1913. He explains how the Fed took classic central banking wisdom from Britain and Europe and adapted it to America's unique and considerably more volatile financial conditions. Mehrling demonstrates how the Fed increasingly found itself serving as the dealer of last resort to ensure the liquidity of securities markets--most dramatically amid the recent financial crisis. Now, as fallout from the crisis forces the Fed to adapt in unprecedented ways, new principles are needed to guide it. In The New Lombard Street, Mehrling persuasively argues for a return to the classic central bankers' "money view," which looks to the money market to assess risk and restore faith in our financial system.
Sponsored by the Lectures & Concerts General Fund and the Economics Department