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33 Professors at NYU Stern Propose Solutions on Restoring the Global Financial System

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November 1 marked the beginning of an unprecedented collaboration among NYU Stern's leading finance and economic scholars. The goal was to harness the collective intellectual strength and expertise at the Stern School in order to influence policy—during and immediately following the transition to the Obama administration-as the repair of the failed financial system got underway. The result was a systematic approach to analyzing the numerous causes of the financial crisis, and to proposing financial policy alternatives and specific courses of action that aimed to restore the global financial and economic system.

By mid-December, 18 White Papers authored by 33 Stern faculty were delivered to 100 policymakers, among them Congress and their staff, the Federal Reserve, and financial regulators. The initial reaction was strong, including overtures from Congressional offices, requests from sovereign banks for meetings and dialogue, and panel discussions led by authors Robert Engle and Nouriel Roubini that took place at the World Economic Forum in Davos.

"With our breadth and depth of faculty, we are well positioned to shape the thinking around these complex and urgent issues, and to do so with objectivity, credibility and speed," said Thomas F. Cooley, Dean of NYU Stern and one of the White Paper authors.

Under the direction of Stern Professors Thomas Cooley, Ingo Walter, Matthew Richardson and Viral Acharya, the 33 professors identified key topics related to the crisis, from managing systemic risk, to the role of the ratings agencies, to regulating large complex financial institutions, citing a few. They formed individual teams of faculty authors based on their area of expertise to analyze the nature of the problem, cite where things went wrong, provide a current state of affairs and recommend options for restoration. Ongoing, often heated, debates and regular forums to exchange ideas produced the first set of Executive Summaries, which were soon after published in Financial Markets, Institutions & Instruments, a professional banking journal. The School subsequently secured a publishing contract from John Wiley & Sons to produce a book on this thinking, entitled Restoring Financial Stability: How to Repair a Failed System, which published on March 4, 2009.

This collective effort has not only yielded a book, but also a six-week course offered to MBA students, taught by the White Paper authors. The course was oversubscribed within the first few hours, with 450 students registering. The course supplements a series of panel discussions for students that took place throughout the fall and winter on the financial crisis, led by Stern faculty. Through Wiley, plans are underway to make the coursework related to the new book more widely available to academic institutions around the world.