Crisis academy

Author:Chris Wellisz
Position:Is on the staff of Finance & Development
54 FINANCE & DEVELOPMENT | December 201854 FINANCE & DEVELOPMENT | December 2018
Veterans of the global financial crisis pass their wisdom on to the next generation
Chris Wellisz
It happened again and again in a career punc-
tuated by upheavals: the peso crisis of 1994,
the Asian crisis of 1997, and nally, the big
one—the global na ncial crisis of 2008.
Each time he started a new government job,
Timothy Geithner hoped to nd a letter from
his predecessor, explaining w hat to do and whom
to call if things fell apart. e desk drawer was
always empty.
“Financial crises a re probably the most devastating
economic events that can happen to a cou ntry,” says
Geithner, who fought the last conagr ation as pres-
ident of the Federal Reserve Ban k of New York and
later US Treasury secretar y. “I’d like our successors
to have a better base of knowledge.”
So every summer, Geithner takes time o from
his job as president of Warburg Pincus, a private
equity rm, to help teach a two-week crisis man-
agement workshop for regulators from around the
world. It’s one part of the Yale Program on Financia l
Stability, which also oers a master’s degree and is
undertaking an ambitious project to create, on a
very large sca le, what Geithner never found in that
desk drawer—a ma nual for crisis managers.
“A lot of times we’ve made the same mista kes in
ghting nancia l crises over time simply because
there was no body of knowledge that people had
jointly studied and debated,” says Andrew Metrick,
a professor of nance at Yale who founded and runs
the program. “It’s almost like you show up at the
emergency room and the doctor says, ‘It looks like
a broken arm. I think I’ve seen someone once do
something for a broken arm.’”
Reviving housing
Metrick was one of those emergency room na n-
cial doctors. Six months after the collapse of
Lehman Brothers in September 2008, he got a
call from the Obama administration. ey des-
perately needed a nancial e conomist. So Metrick
moved to Washington to work for the Council of
Economic Advisers. ere, as chief s ta economist,
he helped develop programs to revive housing and
nancial ma rkets. When it came time to propose
legislation, he discovered that academic research
wasn’t very useful.
“ere was no real great connection between
academic knowledge, economic intuition, and
Timothy Geithner, Zeti Akhtar Aziz,
Andrew Metrick, and Agustín Carstens
on the Yale University campus.

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