Hal S. Scott

Hal S. Scott is Nomura Professor and Director of the Program on International Financial Systems (PIFS) at Harvard Law School. He is Director of the Committee on Capital Markets Regulation, a research organization.

  • Connectedness and Contagion

    Connectedness and Contagion

    Protecting the Financial System from Panics

    Hal S. Scott

    An argument that contagion is the most significant risk facing the financial system and that Dodd¬Frank has reduced the government's ability to respond effectively.

    The Dodd–Frank Act of 2010 was intended to reform financial policies in order to prevent another massive crisis such as the financial meltdown of 2008. Dodd–Frank is largely premised on the diagnosis that connectedness was the major problem in that crisis—that is, that financial institutions were overexposed to one another, resulting in a possible chain reaction of failures. In this book, Hal Scott argues that it is not connectedness but contagion that is the most significant element of systemic risk facing the financial system. Contagion is an indiscriminate run by short-term creditors of financial institutions that can render otherwise solvent institutions insolvent. It poses a serious risk because, as Scott explains, our financial system still depends on approximately $7.4 to $8.2 trillion of runnable and uninsured short-term liabilities, 60 percent of which are held by nonbanks.

    Scott argues that efforts by the Federal Reserve, the FDIC, and the Treasury to stop the contagion that exploded after the bankruptcy of Lehman Brothers lessened the economic damage. And yet Congress, spurred by the public's aversion to bailouts, has dramatically weakened the power of the government to respond to contagion, including limitations on the Fed's powers as a lender of last resort. Offering uniquely detailed forensic analyses of the Lehman Brothers and AIG failures, and suggesting alternative regulatory approaches, Scott makes the case that we need to restore and strengthen our weapons for fighting contagion.

    • Hardcover $40.00 £30.00

Contributor

  • Reforming U.S. Financial Markets

    Reforming U.S. Financial Markets

    Reflections Before and Beyond Dodd-Frank

    Randall S. Kroszner, Robert J. Shiller, and Benjamin M. Friedman

    Two top economists outline distinctive approaches to post-crisis financial reform.

    Over the last few years, the financial sector has experienced its worst crisis since the 1930s. The collapse of major firms, the decline in asset values, the interruption of credit flows, the loss of confidence in firms and credit market instruments, the intervention by governments and central banks: all were extraordinary in scale and scope. In this book, leading economists Randall Kroszner and Robert Shiller discuss what the United States should do to prevent another such financial meltdown. Their discussion goes beyond the nuts and bolts of legislative and regulatory fixes to consider fundamental changes in our financial arrangements.

    Kroszner and Shiller offer two distinctive approaches to financial reform, with Kroszner providing a systematic analysis of regulatory gaps and Shiller addressing the broader concerns of democratizing and humanizing finance. After brief discussions by four commentators (Benjamin M. Friedman, George G. Kaufman, Robert C. Pozen, and Hal S. Scott), Kroszner and Shiller each offer a response to the other's proposals, creating a fruitful dialogue between two major figures in the field.

    • Hardcover $9.75 £7.99
    • Paperback $15.95 £12.99