Unfinished business: Unexplored causes of the financial crisis and lessons yet to be learned
In this seminar, Tamim Bayoumi will present the argument of his recent book called Unfinished Business: the Unexplored Consequences of the Financial Crisis and the Lessons Yet to be Learned. There have been numerous books examining the 2008 financial crisis from either a U.S. or European perspective, but Bayoumi is the first to suggest that the Euro crisis and U.S. housing crash were deeply intertwined. In his book, he traces how it was that under-regulated trading between European and U.S. banks led to a crisis. Starting in the 1980s, Bayoumi outlines the cumulative policy errors that undermined the stability of both the European and U.S. financial sectors, highlighting the catalytic role played by European mega banks that exploited lax regulation to expand into the U.S. market and financed unsustainable bubbles on both continents. U.S. banks increasingly sold sub-par loans to under-regulated European and U.S. shadow banks and, when the bubbles burst, the losses whipsawed back to the core of the European banking system. Bayoumi concludes that policy makers are ignorant of what still needs to be done both to complete the cleanup and to prevent future crises of a similar kind.
Tamim Bayoumi is Deputy Director in the Strategy, Policy, and Review Department at the IMF. He wrote this book while he was a Senior Fellow at the Peterson Institute for International Economics, whilst on leave from the IMF, where he has been since 1988. While at the Fund, Bayoumi has participated in surveillance teams on the United States, Japan, and Canada. At one time he led the division that produces the World Economic Outlook; he has also led the divisions responsible for Fund analysis of exchange rates and for the development of the Fund’s large macroeconomic models. Bayoumi has more recently been responsible for reviewing Fund policy advice to a wide range of mainly G-20 economies including, Brazil, China, the Euro area, Germany, and India. Bayoumi has also been involved in overseeing the Fund’s surveillance strategy, and the work on the Managing Director’s Global Policy Agenda, a document that summarizes both the economic situation and the Fund’s policy advice moving forward. In addition, he has been closely involved in the Fund’s work on unconventional monetary policy, on monetary policy and financial stability, and on policy toward foreign exchange market intervention. Bayoumi has published on a wide range of subjects, including optimum currency areas, fiscal policy, global financial linkages, and policy coordination. He received an undergraduate degree from Cambridge University and a PhD from Stanford University.