Examination of the structure, competitiveness and social utility of U.S. capital markets as the basis for considering the range of proposals for financial regulatory reform growing out of the recent world-wide financial crisis. Specific topics will likely include: mechanisms for controlling risk in financial institutions, particularly capital and liquidity requirements; the unique problem of systemic risk; dealing with illiquid and insolvent institutions, including resolution authority; optimal regulatory structure; reform of securitization; regulation of derivatives trading; consumer protection; the future of Fannie Mae and Freddie Mac; the role and regulation of credit rating agencies; regulating executive compensation, particularly as it effects systemic risk. Classes will be primarily based on interactive discussion, but will also include lectures and regular guest speakers. Required written work will be a final take-home examination. The course assumes a basic understanding of finance and financial markets, but requires no prior professional or academic work in this field.
Note: This course is jointly-listed with HKS as BGP-264.