Bill Dudley on Lessons From the Banking Crisis

Video & Time Stamps

On Thursday, March 30, Bill Dudley joined Markus’ Academy for a lecture on Lessons From the Banking Crisis. Dudley is a Senior Research Scholar at Princeton University’s Griswold Center for Economics Policy Studies and former President of the Federal Reserve Bank of New York.

This is a joint event with Princeton University’s Bendheim Center for Finance and The Griswold Center for Economics Policy Studies.

Watch the full presentation below. You can watch all Markus’ Academy webinars on the Markus’ Academy YouTube channel.

Timestamps:

[3:56] What went wrong at SVB? 

[9:52] The FDIC and the Fed’s lending facilities

[36:50] Implications for monetary policy

[47:30] Implications for regulation and supervision

[1:04:55] What to watch going forward

Summary

• The Federal home loan bank system is a lot more important than people think.Its lending is more popular than the discount window, as it does not have the stigma
• The decision on whether or not to protect uninsured depositors is not black and white. We can conceive of a system where a bank opts to have all their deposits insured, but at the cost seeing restrictions in its activities.
• We talked about bank compensation during the financial crisis, but we quickly forgot about it. Paying executives with subordinated debt (that is bailed-in if the bank fails) would encourage prudent behavior.
• The economy is fundamentally in good shape, and the debt ceiling is the most concerning issue. We will be much better off if we can avoid eleventh hour deals to increase it.
• Download the full summary